Key insights
- US single-family home prices were flat in February, but rising mortgage rates due to geopolitical tensions and inflation fears are a concern. The 30-year fixed-rate mortgage rose to 6.46% in early April, impacting affordability. Regional price variations exist, with some areas experiencing declines. This housing affordability issue could influence the upcoming midterm elections.
WASHINGTON, April 28 (Reuters) - U.S. single-family house prices were unchanged on a monthly basis in February, but elevated mortgage rates as the war with Iran continues could keep the dream of owning a home out of the reach of many young Americans.
The flat reading in house prices followed an upwardly revised 0.2% increase in January, the Federal Housing Finance Agency said on Tuesday. House prices were previously reported to have nudged up 0.1% in January.
Prices advanced 1.7% in the 12 months through February, after climbing 1.8% in January. A shortage of housing, mostly starter homes, is supporting annual house price growth.
The average rate on the popular U.S. 30-year fixed-rate mortgage dropped to 5.98% at the end of February as Freddie Mac and Fannie Mae expanded purchases of mortgage-backed securities.
But it shot up to 6.46% at the start of April as the U.S.-Israeli war with Iran boosted oil prices and fanned inflation fears, resulting in an increase in U.S. Treasury yields. Mortgage rates track Treasury yields. The rate averaged 6.23% last week, data from Freddie Mac showed.
Lack of housing affordability has become a hot-button issue ahead of the U.S. midterm elections in November. Monthly house prices increased in the South Atlantic, New England, East South Central and West South Central regions. But they tumbled 1.1% in the Mountain region and dropped 0.5% in the Pacific region.
On a year-over-year basis, prices increased 4.2% in the Middle Atlantic region and rose 4.0% in the East South Central region. They, however, fell in the Mountain, Pacific and West South Central regions.