According to closely watched surveys released on Tuesday, US single-family home prices slowed down even more in September as higher mortgage rates reduced demand.
After increasing by 12.9% in August, house price growth slowed in September to 10.6%.
According to data from mortgage finance company Freddie Mac, the 30-year fixed mortgage rate crossed the 7% threshold in October for the first time since 2002. Even though the rate dropped to an average of 6.58% last week, it is still significantly higher than the 3.1% average for the same time last year.
According to Craig Lazzara, managing director at S&P DJI, “as the Fed continues to move interest rates higher, mortgage financing continues to be more expensive and housing becomes less affordable.”
According to data released this month, single-family homebuilding and permits for future construction both fell to their lowest levels since May 2020, while sales of previously owned homes registered their ninth consecutive monthly decline in October.
However, a limited supply will probably maintain a floor under housing prices.
A different report from the Federal Housing Finance Agency showed that after falling by 0.7% in August, home prices increased by 0.1% on a monthly basis in September. Prices increased 11% over the previous 12 months, following an increase of 12% in August.
William Doerner, supervisory economist in the Division of Research and Statistics of the FHFA, stated that “the rate of US house price growth has substantially decelerated.”