Home prices fell again in September, according to the latest reading from the S&P Case-Shiller Index, down a modest 0.8% from August, as inventory shortages and a strong job market have seemingly prevented an all-out rout in home values.
With prices still up 10.6% from last year, a swift and volatile rise in mortgage rates has certainly depressed real estate markets across the country. Many economists are hoping for a so-called soft landing, and a housing correction that stabilizes in relatively short order.
But the possibility of a slower market and elevated mortgage rates extending deep into 2023 is real, with some large real estate companies planning for the worst.
Key findings:
- The 10-City Composite annual increase came in at 9.7%, down from 12.1% in the previous month. The 20-City Composite posted a 10.4% year-over-year gain, down from 13.1% in the previous month.
- All 20 cities in the composite reported lower price increases in the year ending September 2022 versus the year ending August 2022.
- Miami, Tampa and Charlotte reported the highest year-over-year gains among the 20 cities in August. Miami led the way with a 24.6% year-over-year price increase, followed by Tampa in second with a 23.8% increase, and Charlotte in third with a 17.8% increase.
- In terms of year-over-year gains, the Southeast (up 20.8%) and South (higher by 19.9%) were the strongest regions by far, with gains more than double those of the Northeast, Midwest and West.
- The two worst-performing cities for year-over-year prices were San Francisco (2.3%) and Seattle (6.2%).
The takeaway:
“As has been the case for the past several months, our September 2022 report reflects short-term declines and medium-term deceleration in housing prices across the U.S…for all three composites. Year-over-year gains, while still well above their historical medians, peaked roughly six months ago and have decelerated since then.
“As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be more expensive and housing becomes less affordable. Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to weaken.”
-Craig J. Lazzara, S&P DJI Managing Director
“The S&P Case-Shiller Index showed that home prices held up well in September, but the index is a backward looking measure that does not reflect current market conditions.
“Since September, home sales have slowed even more as mortgage rates pushed past 7%. We should expect the Case-Shiller to continue its march downward throughout the rest of the year as high mortgage rates stalled buyer activity. The 10-City Composite index showed a year-over-year price gain of 9.65% in September. These higher-cost markets where affordability is a greater challenge will see price growth come down the fastest through the end of the year.”
-Dr. Lisa Sturtevant, Bright MLS Chief Economist
