Home prices are still higher than they were a year ago, but gains are shrinking at the fastest pace on record, according to one key metric, as the housing market struggles under sharply higher interest rates.
Prices in August were 13% higher nationally compared with August 2021, according to the S&P CoreLogic Case-Shiller Home Price Index. That is down from a 15.6% annual gain in the previous month. The 2.6% difference in those monthly comparisons is the largest in the history of the index, which was launched in 1987, meaning price gains are decelerating at a record pace.
The 10-city composite, which tracks the biggest housing markets in the United States, rose 12.1% year over year in August, versus a 14.9% gain in July. The 20-city composite, which includes a broader array of metropolitan areas, was up 13.1%, compared with a 16% increase the prior month.
“The forceful deceleration in U.S. housing prices that we noted a month ago continued in our report for August 2022,” wrote Craig Lazzara, managing director at S&P DJI, in a release. “Price gains decelerated in every one of our 20 cities. These data show clearly that the growth rate of housing prices peaked in the spring of 2022 and has been declining ever since.”
Leading the price gains in August were Miami, Tampa, Florida, and Charlotte, North Carolina, with year-over-year increases of 28.6%, 28% and 21.3%, respectively. All 20 cities reported lower price rises in the year ended in August versus the year ended in July.
The West Coast, which includes some of the costliest housing markets, saw the largest monthly declines, with San Francisco (-4.3%), Seattle (-3.9%) and San Diego (-2.8%) falling the most.
A quick jump in mortgage rates from record lows this year has turned the once red-hot housing market on its heels. The average rate on the popular 30-year fixed home loan started this year right around 3%. By June it stretched over 6% and is now just more than 7%, according to Mortgage News Daily.
“With monthly mortgage payments 75% higher than last year, many first-time buyers are locked-out of housing markets, unable to find homes with budgets that have lost $100,000 in purchasing power this year,” said George Ratiu, senior economist at Realtor.com.
He also noted that higher home prices combined with higher interest rates are keeping would-be sellers from listing their houses. They appear to be locked in to their lower rates.
Source: cnbc.com
