Look out below.
U.S. home prices have grown since last year, but notched a record slowdown, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index. Prices fell for the second straight month in August with only a 13 percent annual rise, down from July’s 15.6 percent annual gain.
The 2.6 percent decline was sharper than any month since the report began publishing data in 1987.
The key metric shows the housing market’s slowdown amid surging mortgage rates and interest rate hikes by the Federal Reserve aimed at slowing inflation.
“These data show clearly that the growth rate of housing prices peaked in the spring of 2022 and has been declining ever since,” said Craig J. Lazzara, managing director at S&P Dow Jones Industries, in a statement.
West coast cities experienced the steepest declines. Prices in San Francisco fell 4.4 percent on a monthly basis in August, while homes in Seattle fell by 3.9 percent and in San Diego by 2.8 percent.
The average 30-year, fixed-rate mortgage rate reached 5.5 percent at the end of August. That figure has since risen towards 7 percent, forecasting further declines in home prices. The Case-Shiller Index uses a three-month moving average to determine monthly prices.
“As the Federal Reserve moves interest rates higher, mortgage financing becomes more expensive and housing becomes less affordable,” Lazzara said. “Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to decelerate.”
Overall, housing prices remain well above levels from a year ago in all of the nation’s largest 20 metro areas, as measured by the index, buoyed by a national shortage of inventory.
Florida remains a hot market — by price if not by volume, which has slowed — as Miami home prices were up 28.6 percent from last year, and a 28 percent increase among Tampa home prices. Homes in Charlotte, Dallas and Atlanta also sold for more than 20 percent more than last year’s levels.
Homes in New York City sold for 12.3 percent more than a year ago through the end of August, declining half a percent since data was collected for July.