Home prices likely to continue slowdown trend in coming months: Case-Shiller
This city showed worst home price drop in a decade
Home prices dropped again in November as the challenges of rising rates and recession fears muted growth, the latest Case-Shiller report said. (iStock)
Annual home price growth slowed in November for the fifth consecutive month. And prices are likely to continue softening, according to the latest S&P CoreLogic Case-Shiller Indices report.
Home prices across the U.S. increased by 7.7% annually in November, down from the 9.2% annual increase in October, Case-Shiller's National Home Price NSA index showed. Home prices have fallen by 3.6% since the market peaked in June 2022.
"November 2022 marked the fifth consecutive month of declining home prices in the U.S.," Craig Lazzara, S&P Dow Jones Indices managing director, said. "As the Federal Reserve moves interest rates higher, mortgage financing continues to be a headwind for home prices. Economic weakness, including the possibility of a recession, would also constrain potential buyers.
"Given these prospects for a challenging macroeconomic environment, home prices may well continue to weaken," Lazzara continued.
One way to take advantage of your home's equity is by using a cash-out refinance to help you pay down debt or fund home improvement projects. Visit Credible to find your personalized interest rate without affecting your credit score.
TAX SEASON 2023: HERE'S HOW THE INFLATION REDUCTION ACT MIGHT IMPACT YOUR REFUND THIS YEAR
San Francisco home prices see the worst annual drop in a decade
On a monthly basis, home prices fell across the nation in November, according to the report. The national home price index dropped 0.6% month-over-month and the 10-city and 20-city composites fell by 0.7% and 0.8%, respectively. Both are 5% below where prices were in June.
"These declines, of course, came after very strong price increases in late 2021 and the first half of 2022," Lazzara said. "Despite its recent weakness, on a year-over-year basis, the National Composite gained 7.7%, which is in the 74th percentile of historical performance levels."
The city with the highest price gain was Miami, where home prices rose 18.4% annually. This was followed by Tampa and Atlanta, which posted increases of 16.9% and 12.7%, respectively.
Prices in San Francisco were down 1.6%, the most significant annual decline posted by the city in a decade, according to the report.
If you are looking to reduce your expenses, you can consider refinancing your home loan to lower your monthly payment. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.
PRICE OF BIDEN'S STUDENT LOAN REPAYMENT PLAN COULD DOUBLE AS TAKE-UP INCREASES, REPORT SAYS
Mortgage rate drop creates savings for buyers
After starting the year with an increase, mortgage rates steadily declined throughout January and into February, creating tangible savings for some homebuyers.
There is a growing sense that inflation has cooled, as the Consumer Price Index, a measure if inflation posted consecutive months of improvement. That has pushed the Federal Reserve's to ease its interest rate increases, which in turn has helped bring mortgage rates down to nearly 6%, according to Freddie Mac.
At that level, buyers with a $22,500 budget can afford to spend roughly $35,000 more on a $400,000 home purchase than they could have when rates peaked at over 7% in November, according to Redfin.
"We expect more homebuyers and sellers to gradually return to the market by springtime, but mixed economic news and mixed reactions from the market mean the recovery will be uneven," Redfin economics research lead Chen Zhao said. "The Fed hiked rates at a slower pace than last year, which means mortgage rates are unlikely to rise further. But it also signaled ongoing rate increases to fight inflation, which will likely prevent the steep mortgage-rate decline that some optimistic buyers have been waiting for."
If you are looking to take advantage of lower mortgage rates by refinancing your mortgage loan, or are ready to shop for the best rate on a loan, consider visiting an online mortgage broker like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.