Home News 8 Cities Where Home Prices Are Falling the Fastest As Market Slows

8 Cities Where Home Prices Are Falling the Fastest As Market Slows

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  • Case-Schiller data showed home prices fell for the second month in a row this week.
  • The outlook for the future of the housing market is generally bearish.
  • 30-year fixed-rate mortgages have risen from 3% in early 2022 to around 7% today.

Officially speaking, US house prices are trending downward at a national level.

Data from the S&P CoreLogic/Case-Schiller US National Home Price NSA Index, which measures home price growth in 20 US cities, shows that home prices fell an average of 1.63% from July to August. This is the second time the index has fallen month-over-month.

However, the latest figures for August, released this week, show the slowest year-over-year price growth in the index’s history. Year-over-year home price growth fell to 13% in August from 15.6% in July.

case shiller index

St. Louis Federal Reserve Bank

Across the country, some cities experienced more severe declines than others.

The cities whose month-over-month declines in the index exceeded the average of the 20 cities in the index are: Dallas, Texas (1.91%); Denver, Colorado (2.29%); Loss Angeles, California (2.25%); Phoenix, Arizona (2.14%); Portland, Oregon (1.94%); Mr. Miss. Diego, California (2.76%); Mr. Miss. Francisco, California (4.28%); When Seattle, Washington (3.87%).

With interest rates high and expected to rise further and stay there, at least according to the Federal Reserve’s forward guidance, forecasts for the housing market are generally bearish. Interest rates on a 30-year fixed-rate mortgage are currently around 7%, up from 3% for him in early 2022.

affordable housing Home prices, mortgage rates, and income are now among the lowest in decades, according to data from the National Association of Realtors.

affordable housing

Yardeni research

“Mortgage financing will become more expensive and housing will become less affordable as the Federal Reserve raises interest rates,” said S&P DJI managing director Craig J. Lazzara in Tuesday’s index release. “Given the continued outlook for a difficult macroeconomic environment, house prices may continue to slow.”

Scott Buchta, head of fixed income strategy at Breen Capital, also said in a note on Wednesday that house prices will continue to fall and eventually fall year-on-year.

“We continue to expect home prices to fall 3% to 5% in the second half of 2022 and 5% to 10% in July 2022 to June 2023, with interest rates hovering around 7.00%. Our biases are probably skewed towards the broader of those “ranges,” Buchta said. “Ultimately, ‘lock-in’ also affects sales volume, which slows upfront payments (lower turnover and cash-out refill rates). ”

Bill Adams, chief economist at Comerica Bank, expressed a similar outlook in a statement on Wednesday.

“The U.S. economy is in the early stages of a major adjustment in housing activity as mortgage rates hover at about 7% and affordability is at record lows, but existing housing inventories remain tight. , the price correction could be more gradual: the main house price index will record a cumulative peak-to-trough mid-single-digit decline from mid-2022 to mid-2023. “

Some economists, who have warned of a fall since the beginning of the year, are predicting a bigger drop.both Ian ShepardsonChief Economist at Pantheon Macroeconomics, Desmond LachmanBoth, senior researchers at the American Enterprise Institute, want reductions in the 15-20% range, for example.

Many see lower mortgage rates as requiring a so-called “Fed pivot” to dovish policy. That might happen next year if the recession deepens and the inflation rate falls as a result, but for now the central bank has signaled its determination to keep interest rates high if conditions permit.

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