Home prices may climb to fresh all-time highs as the Fed eyes rate cuts and mortgage rates fall
- Home prices could keep climbing, as mortgage rates fall and the Fed slashes rates.
- The latest release of the Case-Shiller index data showed a 4.8% annual increase in home prices in October.
Home prices surged in October, and they may have room to run further, according to data from S&P Global's Dow Jones Indices group.
The S&P CoreLogic Case-Shiller home price index, a leading tracker of US home prices, showed a 4.8% annual increase in October, according to a release on Tuesday. In September, the index showed a 4% annual rise in home prices.
And as the Fed is poised to slash rates, sending mortgage rates tumbling lower, lofty prices are expected to stick around.
"Home prices leaned into the highest mortgage rates recorded in this market cycle and continued to push higher," Brian D. Luke, researcher at S&P Dow Jones Indices said. "With mortgage rates easing and the Federal Reserve guiding toward a slightly more accommodative stance, homeowners may be poised to see more appreciation."
According to the release, S&P's 10-city, 20-city and National Index, are at all-time highs.
"A solid, if unspectacular report, this month's index reflects a rising tide across nearly all markets," Luke said.
The sharpest uptick in prices was seen in the Midwest and Northeast regions, Luke said, in cities like Chicago, Boston, Detroit, Cleveland and New York.
As home prices climb, mortgage rates have been falling at their fastest pace since the 2008 crash. That's because the Fed has been eyeing rate cuts next year, sending benchmark bond yields down and lowering borrowing costs for consumer and corporate debt. Mortgage rates have dipped to 6.67% after touching 8% in October for the first time since 2007.
But alongside the easing rates, market experts have been warning about a coming upswing in home prices. Last week, a report from Fitch Ratings said that home prices may pick up speed after the Federal Reserve cuts rates next year, with prices edging up by as much as 3%.
And real estate mogul Barbara Corcoran has said that prices would jump higher the minute mortgage rates slide lower by one more percentage point, with buyer demand set to skyrocket as the cost of home loans drops.