Home prices surged in the second quarter this year, reaching nearly the highest growth rate on record, according to Fannie Mae’s Home Price Index (HPI).
Single-family home prices grew by 19.4% annually in the second quarter of 2022, down just slightly from the upwardly revised 20.5% annual growth in the first quarter, according to the index. On a quarterly basis, home prices rose 4.3% from the first to second quarter.
"Home prices maintained a near-historic pace of appreciation in the second quarter, as low levels of housing inventory continued to support price growth," Doug Duncan, Fannie Mae senior vice president and chief economist, said in a statement. "At the end of 2021 and extending into 2022, we believe many homebuyers pulled forward their purchase plans to avoid expected increases in mortgage rates, contributing to demand for homes and strong price appreciation."
If you want to take advantage of rising home prices, consider taking out a cash-out refinance to pay down debt or fund home improvement projects. Visit Credible to find your personalized interest rate without affecting your credit score.
Home price growth could slow in year ahead
Although home prices are currently rising, that growth could soon slow. In fact, the latest report from CoreLogic showed that while home price gains remained historically high in May, they could decelerate rapidly over the coming year. CoreLogic forecasted that home price growth will slow to just 5% annually by May 2023.
"Given the sharp rise in mortgage rates since that time, and the resulting negative impact on affordability to potential homebuyers, we expect purchase demand to cool in the quarters ahead, and for home price appreciation to moderate as a result," Duncan said.
Mortgage rates have nearly doubled since last year, when rates were below 3%. In June, mortgage rates surged to 6%, and have since come down, but remain significantly higher than last year, according to Freddie Mac data.
If you want to take advantage of your home’s rising value before interest rates increase further, consider taking out a cash-out refinance. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best mortgage rate for you.
How homeowners can tap into their home’s equity
As home values surge, homeowners can take advantage by pulling cash out of their home for paying down debt or home improvement projects. Although mortgage rates are up from last year, they are still significantly lower than interest rates on a personal loan. At the mid-5% range, mortgage rates are approximately half the average rate for a three-year personal loan.
If you are interested in pulling cash out of your home, consider using a cash-out refinance. Visit Credible to get preapproved for a loan in minutes and compare your options.
Another option for homeowners is a home equity line of credit (HELOC), which allows borrowers to take out a loan based on the equity they have in their home. Unlike a cash-out refinance, a HELOC does not affect the interest rate on the entire loan, and sets a new, second loan with its own interest rate. This could be a good option for homeowners who already scored a low interest rate on their mortgage and don’t want to refinance out of it.
If you are considering your home equity options, contact Credible to speak to a home loan expert and get your questions answered.
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