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Published: Jul 28, 2020 5 min read

Home prices posted gains during the month of May thanks to near record low interest rates and limited housing supply. Meanwhile, the number of mortgage loans in forbearance continued on a slow decline last week.

Home prices rose 4.5% year-over-year during the month of May, according to data from the S&P CoreLogic Case Shiller Index, a leading measure of home prices in the U.S. Phoenix posted a 9% increase, leading the way in home prices for the 12th consecutive month, followed by Seattle with a 6.8% price increase and Tampa at 6%.

"May's housing prices were stable. In contrast with the past eight months, May's gains were less than April's," said Craig Z. Lazzara, head of index investment strategy at S&P Dow Jones Indices. "Although prices increased in May, in other words, they did so at a decelerating rate." In April, prices rose at an annual rate of 4.6%.

"More data will obviously be required in order to know whether May's report represents a reversal of the previous path of accelerating prices or merely a slight deviation from an otherwise intact trend. Even if prices continue to decelerate, that is quite different from an environment in which prices actually decline," added Lazzara

As for homeowners navigating the recent uncertainty over a sustainable economic recovery, the share of mortgage loans in forbearance decreased, for the sixth straight week, dropping 6 basis points to 7.74% for the week ending July 19, according to the Mortgage Bankers Association.

"The share of loans in forbearance declined by a smaller amount than in previous weeks, as the pace of borrowers exiting forbearance slowed," said Mike Fratantoni, MBA's chief economist. "Although the [government-sponsored enterprise] portfolio of loans in forbearance should continue to improve, Ginnie Mae's portfolio saw an uptick of both loans in forbearance and borrowers requesting forbearance. The high level of unemployment claims in recent weeks may be playing a role, as weakness would likely impact Ginnie Mae's portfolio first."

What are people paying for mortgages right now?

Borrowers with 700 credit scores were charged an average of 3.725% to secure a 30-year fixed-rate purchase mortgage on Monday, according to Money's survey of over 8,000 mortgage lenders across the country. The average rate for a 30-year refinance was 4.528%.