Private-sector data from a metric called the S&P CoreLogic Case-Shiller National Home Price Index shows a fourth straight month of month-to-month declines in average sale prices for homes. That finding means prices are dropping compared to the immediately prior months, although figures for recent months still show increases compared to the same months last year.
A report in The Wall Street Journal ties the decline in prices to higher interest rates on mortgages, jumps driven by efforts at the Federal Reserve to push down the kind of higher demand that could help drive price increases. The index, which draws data from major metropolitan areas around the U.S., showed a 0.5 percent decline from September to October, which the Journal notes reflects prices sometimes settled upon weeks or months earlier if the contracts were arranged — or at least the pricing terms — well before deals were eventually closed. Although index data still showed growth in prices from the prior year, the one-year rate of inflation in October was below the September number, which was 10.7 percent. In October, that was 9.2 percent.
In line with the increases to interest rates implemented by the Federal Reserve, sales of existing homes have dropped throughout the year. A figure among those behind the housing prices index personally cited interest rates. “As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices,” Craig Lazzara, who serves as managing director at S&P Dow Jones Indices, said. “Given the continuing prospects for a challenging macroeconomic environment, prices may well continue to weaken.” The index utilizes a three-month moving average, meaning the figures reflect averages across three-month periods, which one could imagine would help with capturing a more effectively comprehensive portrait of the market since purchase decisions made around the same time could extend across months before closing.
In versions of the housing prices index using both 10 and 20 cities, the rate of price increases from the prior year went down from September to October. The developments mirror recently circulated data showing a drop in the inflation rate seen for new rentals as September ended. Per numbers reported in Bloomberg after personnel with the Federal Reserve Bank of Cleveland and Labor Department assembled the data, the average one-year price increase reached just under 12 percent in this metric at the end of June of this year. At the end of September, index data showed the one-year rate of increase in prices falling to an even six percent, which was just below the figure produced by the same team averaging the one-year rate of increase in rents for all tenants, as this site reported earlier. The index covers the cost of rent rather than move-in expenses.
U.S. home prices declined 0.3% in October, the fourth consecutive monthly decline, according to the Case-Shiller national index
All 20 cities in the U.S. index posted monthly declines pic.twitter.com/bAabIYsK0u
— Nick Timiraos (@NickTimiraos) December 27, 2022