House prices fell for a third straight month in September amid a rapidly cooling housing market.
The longest streak of monthly declines in a decade is due to a soaring mortgage rateswhich were encouraged by the Federal Reserve in order to stop inflationary pressures throughout the economy.
As a reminder, the S&P CoreLogic Case-Shiller National House Price Index (opens in a new tab) fell 1% in September compared to August. The index, which measures US house priceshas lost 2.6% of its value over the past three months.
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Year-over-year house prices rose 10.6% in September, boosted by low levels of housing inventory.
“As the Federal Reserve continues to drive interest rates higher, mortgage financing continues to become more expensive and housing becomes less affordable,” said Craig Lazzara, managing director of S&P Dow Jones Indices, said in a press release (opens in a new tab). “Given the lingering outlook for a challenging macroeconomic environment, house prices may well continue to weaken.”
To get a sense of what the experts think of the latest home price readings, please find selected commentary from economists, strategists and other market professionals below, sometimes edited for brevity.
- “The S&P index fell 1.24% month-over-month, just around expectations (Barclays and consensus -1.2% month-over-month) and the first time since 2012, showing three consecutive months of declines.Recent trends have begun to unravel away from the robust increases of last year, with prices still up 10.43% year-over-year. , major US cities recorded continued declines, reflecting the Fed’s interest rate hike path affecting the housing market. – Colin Johanson, US macroeconomic research analyst at Barclays
- “It is clear that the slowdown in the housing market continues, but the weakness is not homogeneous across the country. In fact, six of the country’s nine regions saw home prices rise in September from the previous month, while all saw home prices rise a year earlier. Meanwhile, all regions of the country saw home prices rise from a year earlier. The largest year-on-year increase in house prices occurred in the South Atlantic region, up 15.2, followed by the Central Southeast region, with an increase by 14.0%, the Center-South-West region, up 11.1%, the East region the Center-North region, up 10.4%, and the Middle- Atlantic, up 10.1%. » – Eugenio Alemán, chief economist at Raymond James
- “The tech industry correction is having an outsized impact on home prices and valuations in the Bay Area and Pacific Northwest, but price declines in the rest of the country are less severe. mortgage rates and high prices have led to a large decline in house building and sales, but aside from the big pullback in tech-centric metros, national house prices have seen only modest declines so far. Housing will be a headwind for the broader economy over the next year, but a mid-2000s-style boom seems fairly unlikely. Mortgage underwriting standards became much stricter after the Great Recession. And most homeowners have plenty of equity in their homes and stronger balance sheets in general than when the last housing boom crashed. Even so, the continued decline in the housing and commercial real estate markets will be a major headwind for the economy, likely keeping real GDP growth near zero in 2023 and leading to a moderate increase in the unemployment rate relative to at its current very low level. level.” – Bill Adams, Chief Economist for Comerica Bank
- “The S&P Case-Shiller 20-city composite index showed the U.S. housing market spat again in September, with prices falling 1.2% month-on-month. third consecutive decline as rising borrowing costs continue to drive away potential buyers and slow And, although annual price growth still remains in the double digits, up 10.4% year on year on the other, it’s slowing quite rapidly and down from the above 20% growth seen earlier this year.” – Priscilla Thiagamoorthy, Economist at BMO Capital Markets
- “As house prices fall, the ‘owner’s equivalent rent’ component of the consumer price index is expected to moderate, which will be one of the keys to helping inflation subside.” – Louis Navellier, president and founder of Navellier & Associés