WASHINGTON, Jan 26 (Reuters) – U.S. single-family house prices accelerated in November, which combined with high mortgage rates could keep potential homeowners on the sidelines even as the Trump administration takes steps to address the issue of housing affordability.
House prices increased 0.6% on a month-over-month basis after an unrevised 0.4% rise in October, the Federal Housing Finance Agency said on Tuesday. Prices increased 1.9% in the 12 months through November, after advancing 1.8% in October.
House prices remain elevated relative to income growth after adjusting for inflation, pushing homeownership out of reach for many Americans.
President Donald Trump last week signed an executive order restricting institutional investors from buying single-family homes as part of an effort to make housing more affordable. The Trump administration is also purchasing mortgage-backed securities to lower mortgage rates.
Economists and realtors, however, expected these measures would have a limited impact on housing affordability. They said more housing inventory, especially at the lower end of the market, was needed to address the problem.
Homebuilding is being constrained by high material costs because of Trump’s sweeping tariffs, including on lumber, as well as high borrowing costs. There is also a shortage of labor that has been worsened by an immigration crackdown. Building lots are also scarce amid state and local government regulations.
The average rate on the popular 30-year fixed-rate mortgage is hovering around 6.09%, data from mortgage finance agency Freddie Mac shows. Economists do not expect it to break below 6.0%, arguing that Trump’s tax and spending policies are likely to drive up economic growth this year and boost Treasury yields.
Mortgage rates track the 10-year U.S. Treasury yield.
The increase in monthly house prices in November was led by a 1.1% jump in the East South Central region. Prices rose 1.0% in the West South Central region and climbed 0.6% in New England. They rose 0.8% in the South Atlantic region. Prices also rose in the Pacific, Mountain and West North Central regions, but were unchanged in the Middle Atlantic region.
Six of the census regions reported annual house price gains in November, ranging from 1.0% in the West South Central region to 5.1% in the East North Central region. Prices fell in the Pacific and Mountain regions, and were unchanged in the South Atlantic region.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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