US home prices continued to lose momentum in August | CNN Business

US home prices continued to gain in August, but the pace of growth slowed considerably as higher mortgage rates pushed more potential buyers out of the market.

Home prices rose 13% in August from a year earlier, a smaller jump from growth of 15.6% in July and 18.1% in June, according to the US S&P CoreLogic Case-Shiller National Home Price Index. The drop between July and August was the biggest slowdown in the index’s history dating back to 1987, topping the previous record a month earlier.

July also saw the first monthly decline for the national index since February 2012 and that continued into August, as seasonally adjusted prices fell 0.9% month over month.

“This data clearly shows that the rate of home price growth peaked in the spring of 2022 and has been declining since then,” said Craig J. Lazzara, managing director of S&P Dow Jones Indices.

All 20 cities tracked by the index reported smaller price increases in August than a year earlier. But despite the ongoing slowdown, home prices in August were still well above last year’s levels in all 20 cities.

Miami made the biggest gain, with home prices up 28.6% in August from a year earlier. It was followed by Tampa, which rose by 28%, and then Charlotte, which was up 21.3%. However, the pace of price hikes is decreasing in those cities as well.

Price growth was strongest in the Southeast, up 24.5% from a year ago, and in the South, up 23.6%.

But annual price growth is expected to continue declining and some regions may start to see year-on-year declines.

“As the Federal Reserve raises interest rates, mortgage financing becomes more expensive and housing becomes less expensive,” Lazarra said. “House prices may continue to slow.”

On a monthly basis, all 20 cities saw lower prices in August than in July with the biggest drops occurring in the West. Home prices in San Francisco fell 4.3% in August from the previous month, followed by Seattle (down 3.9%) and San Diego (down 2.8%).

A separate report from the Federal Housing Finance Agency released on Tuesday also showed a similar trajectory for home prices in August.

The FHFA Home Price Index, which measures changes in the values ​​of single-family homes, reported that home prices rose 11.9% year-on-year in August, and fell 0.7% from the previous month. The agency said that in July the index showed the first monthly decline in home prices since May 2020. The August drop was the first time since March 2011 that the index witnessed two consecutive months of decline.

“High mortgage rates continued to put pressure on demand, particularly dampening home price growth.” said Will Dorner, supervisory economist in the FHFA’s Research and Statistics Division.

The average 30-year flat rate mortgage is currently 6.94%, double what it was at the beginning of the year. But affordability has worsened since August, when prices fell by a full point.

The decline in home price increases in August reflects the late-summer slowdown in home-shopper activity, said George Ratio, chief economist and director of economic research at Realtor.com.

“For homebuyers, the effect of higher inflation has been compounded by inflation rising to its highest level in four decades, leading to less money in their pockets and shrinking budgets,” Ratio said. “The sharp decline in demand was reflected in lower sales and slowing home prices.”

Since August, other indicators have shown that the housing market is cooling. With mortgage rates soaring to nearly 7% – a level not seen in 20 years – home sales are down and builders have held back from building new homes.

“With monthly mortgage payments up 75% from last year, many first-time buyers are left out of the housing markets, unable to find budget homes that have lost $100,000 in purchasing power this year,” Ratio said.

#home #prices #continued #lose #momentum #August #CNN #Business

Leave a Comment

Your email address will not be published. Required fields are marked *