Major city home prices fell in October from the previous month as housing affordability continues to be crushed in America with higher mortgage interest rates and inflation. Price growth decelerated in all of the 20 cities. The average rate on a 30-year fixed-rate mortgage was 6.27% as of Dec. 22, up from 3.05% a year earlier, according to housing-finance agency Freddie Mac. The S&P CoreLogic Case-Shiller National Home Price Index, fell 0.5% in October compared with September, the fourth straight month-over-month decline. On a year-over-year basis, the index rose 9.2% in October, down from a 10.7% annual rate the prior month.
Prices are falling fastest in West Coast markets, such as Phoenix and Las Vegas, where from September to October they fell 1.6% and 1.8%, respectively. Existing-home sales fell for 10 straight months through November.
Composite Home Price Indices.
“As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices,” said Craig Lazzara, managing director at S&P Dow Jones Indices. “Given the continuing prospects for a challenging macroeconomic environment, prices may well continue to weaken.”
S&P CoreLogic October 2022 Highlights
- US S&P CoreLogic CS 20-City (M/M) SA Oct: -0.50% (est -1.10%; prevR -1.30%)
- US S&P CoreLogic CS 20-City (Y/Y) SA Oct: 8.63% (est 8.2%; prevR 10.40%)
- US S&P CoreLogic CS US HPI (M/M) SA Oct: 9.20% (prevR 10.70%)
Homes usually go under contract a month or two before they close, as such the October data reflects purchase decisions made earlier in the year, when interest rates weren’t as high as they are now. The Federal Reserve continues to raise interest rates making mortgage financing more expensive. We saw 30-year fixed-rate mortgage over 7%, up from 2.88% from a year earlier.
“October 2022 marked the fourth consecutive month of declining home prices in the U.S.,” says Craig J.Lazzara, Managing Director at S&P DJI. “For example, the National Composite Index fell -0.5% for the month, reflecting a -3.0% decline since the market peaked in June 2022. We saw comparable patterns in our 10- and 20-City Composites, both of which stand -4.6% below their June peaks after October declines of -0.7% and -0.8%, respectively. These declines, of course, came after very strong price increases in late 2021 and the first half of 2022.
“Despite considerable regional differences, all 20 cities in our October report reflect these trends of short-term decline and medium-term deceleration. Prices declined in every city in October, with a median change of -0.9%. Year-over-year price gains in all 20 cities were lower in October than they had been in September; the median year-over-year increase across the 20 cities was 8.3%.
Location Changes
October’s best-performing cities were:
- Miami (+21.0% year-over-year)
- Tampa (+20.5%),
- Charlotte (+15.0%)
- Atlanta (+14.9%)
The Southeast (+17.9%) and South (+17.0%) were the strongest regions by far, with gains more than double those of the Northeast, Midwest, and West.
Weakest performers were
- San Francisco (up only +0.6% year-over-year)
- Seattle (+4.5%).
- San Francisco and Seattle peaked in May 2022, and both have declined by more
than -10% since then.
Prices are falling fastest in West Coast markets, such as Phoenix and Las Vegas, where from September to October they fell 1.6% and 1.8%, respectively.
FHFA House Price Index October 2022 Highlights
The FHFA House Price Index (M/M) unchanged in October (est -0.2%; prev +0.1%)
Source: S&P Global
From The TradersCommunity News Desk