Home price growth in October loses steam for fourth consecutive month: Case-Shiller

Annual home price growth continued to slow in October as higher mortgage rates continued to test homebuyer affordability, according to the latest S&P CoreLogic Case-Shiller Indices report.

Home prices across the U.S. increased by 9.2% annually in October, down from the 10.7% annual increase in September, Case-Shiller's National Home Price NSA index showed. Home prices have fallen by 3% since the market peaked in June 2022. 

"October 2022 marked the fourth consecutive month of declining home prices in the U.S.," Craig Lazzara, S&P Dow Jones Indices managing director, said. "As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices.  

"Given the continuing prospects for a challenging macroeconomic environment, prices may well continue to weaken," Lazarra continued.

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This city saw the greatest price gains

On a monthly basis, home prices fell across the nation in October, according to the report. The national home price index dropped 0.5% month-over-month and the 10-city and 20-city composites fell by 0.7% and 0.8%, respectively. Both are 4.6% below where prices were in June. 

"Despite considerable regional differences, all 20 cities in our October report reflect these trends of short-term decline and medium-term deceleration," Lazarra said. "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%."

The city with the highest price gain was Miami, where home prices rose 21% annually. This was followed by Tampa and Charlotte, which posted increases 20.5% and 15%, respectively. Prices in Atlanta are also higher and gained 14.9% in October. 

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Mortgage rates continue to test affordability

High mortgage rates and inflation continued to be barriers to entry for homebuyers. Existing home sales declined consecutively for ten months, showing that "homebuyers are tapped out," Realtor.com said in a statement.

That drop in demand is driving the month-over-month slowdown in home price growth. 

"Even as would-be sellers are pulling back from listing their properties, the number of homes for sale is growing, as is the number of days a home sits on the market waiting for a buyer," Realtor.com Senior Economist George Ratiu, said in a statement. "With fewer buyers and a growing inventory of discounted listings, the median price continues to retreat from the peak.

"Buyers and sellers are taking a wait-and-see approach to markets, keeping an eye on the direction of the economy," Ratiu continued. "A soft landing in 2023, predicated on the Fed successfully taming inflation without harming employment, could offer a better foundation for economic and real estate activity. However, the downside risks loom large on the horizon."

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