U.S. News: Home Prices Decline for Third Straight Month

"Home prices fell in September from the prior month, marking the first time prices have declined for three straight months in nearly four years.

The S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the nation, fell 1% in September from August. Over the past three months, the index is down 2.6%.

Home prices in many major cities had been booming for years before the pandemic-fueled home buying spree pushed prices even higher. That surge reversed abruptly this year due to a rapid rise in mortgage rates, which made home buying far less affordable and pushed many buyers out of the market. Existing-home sales fell for nine straight months through October, and sales activity has declined sharply in much of the country.

Home prices are still rising on an annual basis because the inventory of homes for sale is at an unusually low level. In September, the index rose 10.6% compared with a year earlier. That was down from a 12.9% annual rate the prior month, and many economists are forecasting year-over-year price declines in 2023.

Surveys also show buyer enthusiasm waning. Consumer sentiment toward the housing market fell in October to a record low in data going back to 2011, according to Fannie Mae.

The West Coast has been especially hard-hit by rising interest rates. Its real estate is among the most expensive in the country, and workers at many tech companies have faced layoffs and falling stock prices.

Home prices in San Francisco tumbled 2.9% in September from August. Recent monthly home price declines there have been steeper than the city's monthly price declines in 2001 when the dot-com bust spilled over to the housing market. Seattle home prices also fell 2.9% on a monthly basis.

The Case-Shiller index, which measures repeat-sales data, reports on a two-month delay and reflects a three-month moving average. Homes usually go under contract a month or two before they close, so the September data is based on purchase decisions made earlier in the year.

"As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be more expensive and housing becomes less affordable," said Craig Lazzara, managing director at S&P Dow Jones Indices. "Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to weaken."

The average rate on a 30-year fixed-rate mortgage was 6.58% in the week ended Nov. 23, up from 3.1% from a year earlier, according to housing-finance agency Freddie Mac." [1]

1. U.S. News: Home Prices Decline for Third Straight Month
Friedman, Nicole. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 30 Nov 2022: A.3.