Home prices fall for third straight month as high mortgage rates hammer market

Month-to-month home costs fell in July for the primary time since late 2018.
JL/Sipa USA

US single-family dwelling costs slowed additional in September as increased mortgage charges eroded demand, carefully watched surveys confirmed on Tuesday.

The S&P CoreLogic Case Shiller nationwide dwelling value index dropped 0.8% month-over-month in September. Month-to-month home costs fell in July for the primary time since late 2018.

Home costs rose 10.6% year-on-year in September, slowing from August’s enhance of 12.9%.

The housing market has been hammered by aggressive Federal Reserve rate of interest hikes which can be aimed toward curbing excessive inflation by dampening demand within the financial system.

The 30-year mounted mortgage price breached 7% in October for the primary time since 2002, information from mortgage finance company Freddie Mac confirmed. Although the speed has retreated to common 6.58% final week, it stays nicely above the three.1% common throughout the identical interval final 12 months.

“Because the Fed continues to maneuver rates of interest increased, mortgage financing continues to be dearer and housing turns into much less inexpensive,” Craig Lazzara, managing director at S&P DJI, mentioned in an announcement. “Given the persevering with prospects for a difficult macroeconomic surroundings, dwelling costs could nicely proceed to weaken.”

Information this month confirmed gross sales of beforehand owned properties logged their ninth straight month-to-month decline in October, whereas single-family homebuilding and permits for future development dropped to the bottom ranges since Might 2020.

Tight provide will, nonetheless, seemingly maintain a ground underneath home costs. A surge in distant work through the COVID-19 pandemic led to a housing market growth, driving costs to report highs.

A separate report from the Federal Housing Finance Company exhibiting dwelling costs edged up 0.1% on a month-to-month foundation in September after declining 0.7% in August. Within the 12 months by September, costs climbed 11% after advancing 12% in August.

“The speed of US home value progress has considerably decelerated,” mentioned William Doerner, supervisory economist in FHFA’s Division of Analysis and Statistics.

“This deceleration is widespread with about one-third of all states and metropolitan statistical areas registering annual progress under 10%.”