US house prices continued to lose momentum in August |  CNN Business

US house prices continued to lose momentum in August | CNN Business

US home prices continued to gain ground in August, but the pace of growth slowed significantly as rising mortgage rates pushed more potential buyers out of the market.

House prices rose 13% in August from a year earlier, down from the 15.6% growth seen in July and 18.1% in June, according to the National House Price Index. S&P CoreLogic Case-Shiller houses in the United States. The decline between July and August was the sharpest deceleration in the index’s history dating back to 1987, surpassing the previous record a month earlier.

July also marked the first month-on-month decline in the national index since February 2012 and this continued into August as seasonally adjusted prices fell 0.9% month-on-month. ‘other.

“These data clearly show that the rate of house price growth peaked in the spring of 2022 and has been declining ever since,” said Craig J. Lazzara, managing director of S&P Dow Jones Indices.

The 20 cities tracked by the index recorded lower price increases in August compared to a year earlier. But despite the ongoing deceleration, house prices in August remain well above levels from a year ago in all 20 cities.

Miami posted the largest gains, with home prices rising 28.6% in August from a year earlier. It was followed by Tampa, which rose 28%, and Charlotte, with an increase of 21.3%. However, the pace of price appreciation is also decreasing in these cities.

Price growth was strongest in the Southeast, which was up 24.5% from a year ago, and in the South, which was up 23.6%.

But annual price growth is expected to continue to decline, and some regions may begin to experience year-over-year declines.

“As the Federal Reserve raises interest rates, mortgage financing becomes more expensive and housing becomes less affordable,” Lazzara said. “House prices may well continue to slow.”

Month over month, all 20 cities saw prices decline in August compared to July, with the largest declines occurring in the West. House prices in San Francisco fell 4.3% in August from the previous month, followed by Seattle (down 3.9%) and San Diego (down 2.8%).

A separate report from the Federal Housing Finance Agency also released on Tuesday showed a similar trajectory for house prices in August.

The FHFA Home Price Index, which measures changes in the value of single-family homes, said home prices rose 11.9% year-over-year in August and fell 0, 7% compared to the previous month. In July, the index showed the first monthly decline in house prices since May 2020, the agency said. The August drop marked the first time since March 2011 that the index has seen two consecutive months of decline.

“Rising mortgage rates continued to put pressure on demand, in particular weakening house price growth.” said Will Doerner, supervising economist in FHFA’s Research and Statistics Division.

The average rate for a 30-year fixed rate mortgage is currently 6.94%, double what it was at the start of the year. But affordability has deteriorated since August, when rates were one point lower.

The decline in home price appreciation in August reflects slowing homebuyer activity at the end of the summer, said George Ratiu, senior economist and head of economic research at

“For homebuyers, the impact of higher rates has been compounded by inflation that has reached its highest level in four decades, resulting in less money in their pockets and shrinking budgets,” he said. Ratiu said. “The sharp decline in demand has translated into lower sales and decelerating house prices.”

Since August, other indicators have shown that the housing market is cooling. With mortgage rates climbing to nearly 7% – a level not seen in 20 years – home sales have plummeted and builders have slowed construction of new homes.

“With monthly mortgage payments 75% higher than last year, many first-time buyers are locked out of the housing market, unable to find homes with budgets that have lost $100,000 in buying power this year” , Ratiu said.

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