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Home price gains declined across the U.S. for the third straight month in September as rising mortgage rates caused more homebuyers to pull back from the market.
The S&P Corelogic Case-Shiller Home Price Index reported a 10.6 percent annual gain in home prices during September, down from the previous month when they increased 12.9 percent. On a month-over-month basis, the index dropped 1 percentage point between August and September.
Case-Shiller’s 10-city and 20-city composites posted monthly declines of 1.4 and 1.5 percent respectively. The 10-city composite annual increase was 9.7 percent, down from its previous increase of 12.1 percent, while the 20-city composite increased 10.4 percent annually, down from 13.1 percent the previous month.
Source: S&P Dow Jones Indices and CoreLogic
“As has been the case for the past several months, our September 2022 report reflects short-term declines and medium-term deceleration in housing prices across the U.S.,” said Craig J. Lazzara, managing director at S&P Dow Jones Indices. “For all three composites, year-over-year gains, while still well above their historical medians, peaked roughly six months ago and have decelerated since then.”
The slowing market is indicative both of buyer behavior, with many buyers experiencing mortgage sticker shock, and of regular seasonal patterns, with the market typically slowing down in the colder months.
“Would-be home sellers also retreated from the market this fall,” George Ratiu, senior economist at Realtor.com, said in a statement. “Some of this seller pullback is seasonal —on account of colder months and holidays — and some is a reflection of ongoing challenges. Many homeowners who may want to move find themselves locked into sub-3.0% mortgage rates, especially if they purchased or refinanced in the 2020-21 period when rates reached historic lows. The prospect of facing higher prices for a trade-up home plus mortgage rates that are likely double their existing ones offers very little incentive to someone looking to make a move.”
The average rate on a 30-year mortgage was 6.58 percent for the week ending Nov. 23, according to Freddie Mac, a decline from previous weeks when it exceeded 7 percent.
