US home prices tumble in September for third straight month
Prices may continue to decelerate as Fed raises interest rates higher
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Home prices declined again in September as rising mortgage rates sapped demand from the housing market.
Prices slid 1% nationally in September from August, the third consecutive monthly decline, the S&P CoreLogic Case-Shiller index showed on Tuesday. On an annual basis, the index climbed 10.6% in September, down from a 12.9% rate the previous month.
"As the Federal Reserve 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 Dow Jone Indices, said in a statement. "Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to weaken."
A "For Sale" outside a house in Hercules, California, US, on Tuesday, May 31, 2022. (Photographer: David Paul Morris/Bloomberg via Getty Images) (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)
The 10-city composite, meanwhile, climbed 9.7% annually, down from 12.1% in August, and the 20-city composite rose 10.4% in September, following a gain of 13.1% the previous month. Price growth slowed in all 20 cities.
Homes in a subdivision in Atlanta, Georgia, US, on Sunday, Nov. 13, 2022. (Photographer: Elijah Nouvelage/Bloomberg via Getty Images / Getty Images)
The Case-Shiller index reports with a two-month delay, meaning it may not capture the latest slowdown in the market.
Even with higher interest rates putting homeownership out of reach for millions of Americans, prices are still steeper than just one year ago.
The median new house price climbed nearly 15.4% in October from the year-ago period to $493,000, according to a separate report last week from the National Association of Realtors. That is also up more than 8% from September.
The interest rate-sensitive housing market has borne the brunt of the Federal Reserve's aggressive campaign to tighten policy and slow the economy. Policymakers already lifted the benchmark federal funds rate five consecutive times and have shown no sign of pausing as they try to crush inflation that is still running near a 40-year high.
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The average rate for a 30-year fixed mortgage hovered around 6.58% for the week ended Nov. 23, according to the latest data from mortgage lender Freddie Mac. While that is down from a peak of 7% in September, it's still more than double just one year ago, when rates stood at 3.10%.
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Combined with high home prices, the rapid rise in borrowing costs has pushed many entry-level homebuyers out of the market.