US house annual prices slow again in September
US SINGLE-FAMILY home prices slowed further in September as higher mortgage rates eroded demand, closely watched surveys showed on Tuesday (Nov 29).
The S&P CoreLogic Case Shiller national home price index dropped 0.8 per cent month-over-month in September. Monthly house prices fell in July for the first time since late 2018.
House prices rose 10.6 per cent year on year in September, slowing from August’s increase of 12.9 per cent.
The housing market has been hammered by aggressive Federal Reserve (Fed) interest rate hikes that are aimed at curbing high inflation by dampening demand in the economy.
The 30-year fixed mortgage rate breached 7 per cent in October for the first time since 2002, data from mortgage finance agency Freddie Mac showed. Though the rate has retreated to average 6.58 per cent last week, it remains well above the 3.10 per cent average during the same period last year.
“As the Fed continues to move interest rates higher, mortgage financing continues to be more expensive and housing becomes less affordable,” Craig Lazzara, managing director at S&P DJI, said in a statement. “Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to weaken.”
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Data this month showed sales of previously owned homes logged their ninth straight monthly decline in October, while single-family homebuilding and permits for future construction dropped to the lowest levels since May 2020.
Tight supply will, however, likely keep a floor under house prices. A surge in remote work during the Covid-19 pandemic led to a housing market boom, driving prices to record highs.
A separate report from the Federal Housing Finance Agency (FHFA) showing home prices edged up 0.1 per cent on a monthly basis in September after declining 0.7 per cent in August. In the 12 months through September, prices climbed 11.0 per cent after advancing 12.0 per cent in August.
“The rate of US house price growth has substantially decelerated,” said William Doerner, supervisory economist in FHFA’s Division of Research and Statistics.
“This deceleration is widespread with about one-third of all states and metropolitan statistical areas registering annual growth below 10 per cent.” REUTERS
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