Home Prices Posted Biggest Monthly Decline in a Decade in August

New York, NY, October 26, 2022-"Home prices posted their biggest month-on-month decline in more than a decade in August as rising mortgage rates weighed on home-buying demand,” reports the Wall Street Journal.

“The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, fell 1.1% in August from July, the second straight month-over-month decline. The August decline was also the biggest month-on-month decrease since December 2011.

“The index rose 13% in the year that ended in August, down from a 15.6% annual rate the prior month.

“On a seasonally adjusted basis, meanwhile, the index posted two straight months of declines for the first time since 2012.

“The housing market has slowed abruptly this year due to a rapid increase in mortgage rates, which has raised borrowing costs for home buyers and pushed many prospective buyers out of the market. Existing-home sales fell for eight straight months through September.

“Year-over-year home-price growth has slowed from the record pace of more than 20% reached in March, and economists expect price growth to continue to decelerate this year. The Case-Shiller index, which measures repeat-sales data, reports on a two-month delay and reflects a three-month moving average. Homes usually go under contract a month or two before they close, so the August data reflects purchase decisions made earlier in the year, when interest rates weren’t as high as they are now.

“‘With inventory rising so quickly and demand slowing so quickly, we have returned to a buyer’s market,’ said Ali Wolf, chief economist at housing-market research firm Zonda. ‘If mortgage rates are 6%-plus, in my mind, there’s no doubt that we’re going to see a downward adjustment to home prices.’”