Home Prices Continue to Decline in October

Home prices declined in October from the previous month as higher mortgage interest rates continued to weigh on home-buying demand. According to the National Association of Realtors, the median price for a home was $258,100 in October, down from $261,600 in September.

The S&P CoreLogic Case-Shiller National Home Price Index fell 0.5% in October, the fourth straight month-over-month decline. This index measures average home prices in major metropolitan areas across the nation.

The index rose 9.2% in October on a year-over-year basis, down from a 10.7% annual rate the prior month.

Mortgage rates have increased this year, causing a slowdown in the housing market that had been booming during the pandemic. This has led to a decrease in existing-home sales for 10 consecutive months through November.

Many economists expect prices to continue to decline from their spring peaks, with some calling for year-on-year price declines in 2023. So far this year, prices are down 3% from their June highs, according to the Case-Shiller index. Prices are declining fastest in West Coast markets, such as Phoenix and Las Vegas, where from September to October they fell 1.6% and 1.8%, respectively.

Craig Lazzara, managing director at S&P Dow Jones Indices, said that as the Federal Reserve continues to raise interest rates, mortgage financing is becoming a bigger challenge for home prices. He added that with the current economic conditions, prices may continue to go down.

The Case-Shiller index, which is based on repeat-sales data, reports with a two-month delay. This is because homes usually go under contract a month or two before they close. Therefore, the October data is based on purchase decisions made earlier in the year.

The average rate on a 30-year fixed-rate mortgage has increased from 3.05% to 6.27% over the past year, according to housing-finance agency Freddie Mac.

The median existing-home price rose 3.5% in November from a year earlier, according to the National Association of Realtors. This increase brings the median price of an existing home to $370,700.

The Case-Shiller 10-city index gained 8% over the year ended in October, compared with a 9.6% increase in September. The 20-city index rose 8.6%, after an annual gain of 10.4% in September. Price growth decelerated in all of the 20 cities.

According to the latest data, Miami had the fastest annual home-price growth in the country, at 21%. This was followed by Tampa, at 20.5%, and Charlotte at 15%. The weakest market was San Francisco, where prices rose by just 0.6% on an annual basis.