US home prices fell in January for seventh straight month
Higher mortgage rates dampening consumer demand for new US homes
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Home prices continued to decline in January as higher mortgage rates dampened consumer demand for new houses.
Prices slid 0.6% nationally in the period from December to January, the seventh consecutive monthly decline, the S&P CoreLogic Case-Shiller index showed on Tuesday. On an annual basis, prices are up just 3.8%, according to the index.
"Home prices fell again in January and are now barely higher than they were a year ago," said Jeff Tucker, a senior economist at Zillow. "January’s home price weakness is yet more proof of the doldrums the housing market was stuck in during the fall and winter, when buyers and sellers were forced to come to terms with a new, relatively higher-interest-rate environment."
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Open house at a home for sale in Evesham Twp., N.J., Feb. 26, 2023. (Fox News)
The 10-city composite, meanwhile, climbed 2.5% annually, down from 4.4% in December, and the 20-city composite also increased 2.5% in January, following a gain of 4.6% the previous month.
Prices declined in all 20 cities over the course of the month, except for Miami, which saw a 0.1% increase from December to January. Cities that saw the biggest year-over-year decline include San Francisco (-7.6%), Seattle (-5.1%), Portland, Oregon (-0.5%) and San Diego (-1.4%).
"Despite this, the Federal Reserve remains focused on its inflation-reduction targets, which suggest that rates may remain elevated in the near-term," said Craig Lazzara, managing director at S&P DJI. "Mortgage financing and the prospect of economic weakness are therefore likely to remain a headwind for housing prices for at least the next several months."
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The Case-Shiller index reports with a two-month delay, meaning it may not capture the latest slowdown in the market.
For months, higher mortgage rates have dampened consumer demand and brought down home prices.
But in February, for the first time in a record 131 straight months – about 11 years – home prices posted an annual decline, falling 0.2% from the same time one year ago, according to a separate release from the National Association of Realtors.
Residential neighborhoods in Austin, Texas, on May 22, 2022. (Photographer: Jordan Vonderhaar/Bloomberg via Getty Images / Getty Images)
The median price of an existing home sold in February was $363,000, down from $363,700 in 2022.
The interest rate-sensitive housing market has borne the brunt of the Federal Reserve's aggressive campaign to tighten policy and slow the economy.
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Policymakers already lifted the benchmark federal funds rate nine consecutive times and have signaled that a tenth increase is on the table at their May meeting amid signs of underlying inflationary pressures within the economy.