by Median U.S. home prices fell for the first time in a decade, new data showed.
A benchmark data set comparing home prices in the 20 largest cities fell .44 percent in July, the first decline in the S&P CoreLogic Case-Shiller index since March 2012.
It’s a signal to some observers that the pandemic-era housing buying spree may be coming to an end as the Federal Reserve continues to raise interest rates.
“The cooling came hard and fast,” said Stephen Stanley, chief economist at Amherst Pierpoint. he said YEAR.
West Coast cities already struggling with affordability such as San Francisco, Seattle and San Diego saw the biggest declines, according to the latest housing index data released this week. In these cities, house prices fell by 3.6%, 2.5% and 2% respectively.
However, it wasn’t all bad news for the US housing market.
Home prices in July rose compared to 2021 on a year-over-year basis.
In the 10 largest metropolitan areas, prices rose 14.9% from last July, although growth was slower than June’s 17.4% year-over-year gain.
When the list was expanded to the 20 largest metros, including Seattle and Detroit, year-over-year gains were even higher in July, with home prices rising 16.1% in July and 18.7% in June.
Cities like Tampa, Florida, Miami and Dallas had the highest annual gains, with price increases of between a quarter and a third each.
The housing market is seasonal and prices usually fall during the summer, but observers say something deeper is at work here and blame the Federal Reserve’s policy of raising bank lending rates to fight inflation for the impact on the housing market.
“The July report reflects a strong slowdown,” said Craig Lazzara, managing director of S&P Dow Jones Indices. he said in a press release.
“As the Federal Reserve continues to raise interest rates, mortgage financing has become more expensive, a process that continues to this day,” he added. “Given the outlook for a more challenging macroeconomic environment, house prices may well continue to decelerate.
Other data support these trends.
According to the National Association of Realtors, home prices fell three times faster than the seasonal norm between June and July, and the share of homes with price cuts was 20 percent in August.
The Fed said its benchmark interest rate could rise to 4.4 percent by the end of the year as the U.S. central bank seeks to slow inflation. Officials such as Fed Chairman Jerome Powell say this could increase unemployment.
“I wish there was a painless way to do this,” he said he said this week. “There is no.”
