According to the latest data from the leading index on home costs, the downward trend in home price growth held firm in October, marking the fourth consecutive month of declines amid persistent volatility in the housing market and the overall economic landscape.
The S&P Case-Shiller Index showed a 9.2% annual price gain for single-family homes nationwide—down from a 10.7% YoY increase in September. The National Composite Index fell 0.5% for the month, which experts note marks a 3.0% decline since the market peaked in June 2022.
All 20 cities reported lower price increases in the year ending October 2022 versus the year ending September 2022.
The 10 and 20 City Composites followed suit, showing modest monthly dips of 0.7% and 0.8%, respectively. Annually, the 10-City Composite showed an 8.0% increase in October, while the 20-City Composite posted an 8.6% YoY gain.
Miami, Tampa, and Charlotte reported the highest YoY gains among the 20 cities in October, climbing 21%, 20.5%, and 15%, respectively.
The complete data for the 20 markets measured by S&P:
Atlanta, Georgia
October/September: -0.8%
Year-Over-Year: 14.9
Boston, Massachusetts
October/September: -1.0%
Year-Over-Year: 7.6
Charlotte, North Carolina
October/September: -0.9%
Year-Over-Year: 15
Chicago, Illinois
October/September: -0.5%
Year-Over-Year: 8.9
Cleveland, Ohio
October/September:-1.0%
Year-Over-Year: 8.7
Dallas, Texas
October/September: -1.3%
Year-Over-Year: 13.5
Denver, Colorado
October/September: -1.1%
Year-Over-Year: 7.9
Detroit, Michigan
October/September: -0.9%
Year-Over-Year: 7.0%
Las Vegas, Nevada
October/September: -1.8%
Year-Over-Year: 9.4%
Los Angeles, California
October/September: -0.6%
Year-Over-Year: 6.6%
Miami, Florida
October/September: -1.0%
Year-Over-Year: 21.0%
Minneapolis, Minnesota
October/September: -0.7%
Year-Over-Year: 5.9%
New York, New York
October/September: -0.2%
Year-Over-Year: 9.3%
Phoenix, Arizona
October/September: -1.6%
Year-Over-Year: 9.6%
Portland, Oregon
October/September: -0.9%
Year-Over-Year: 5.4%
San Diego, California
October/September: -0.7%
Year-Over-Year: 7.7
San Francisco, California
October/September: -1.7%
Year-Over-Year: 0.6
Seattle, Washington
October/September: -1.0%
Year-Over-Year: 4.5
Tampa, Florida
October/September: -0.8%
Year-Over-Year: 20.5
Washington, D.C.
October/September: -0.5%
Year-Over-Year: 6.0%
The takeaway:
“October 2022 marked the fourth consecutive month of declining home prices in the U.S.,” says Craig J. Lazzara, Managing Director at S&P DJI in a statement. “These declines, of course, came after very strong price increases in late 2021 and the first half of 2022. Despite its recent weakness, on a year-over-year basis, the National Composite gained 9.2%, which is in the top quintile of historical performance levels.
“As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices. Given the continuing prospects for a challenging macroeconomic environment, prices may well continue to weaken,” Lazzara concluded.
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“The S&P Case-Shiller showed that home price growth decelerated again,” said Dr. Lisa Sturtevant, chief economist at Bright MLS in a statement. “Annual price growth on a non-seasonally-adjusted basis has now fallen for six consecutive months, reflecting higher mortgage rates and cooler demand. However, October’s price growth did not fall as much as expected. The steady downturn in price appreciation indicates the housing market is definitely resetting, but October’s index suggests that the price correction may not be as steep as some have anticipated.
“Although price growth was lower in October than it had been during the height of the pandemic housing market, the pace of annual price appreciation is still double the historic average, according to Case-Shiller data that goes back to 1988. The price growth slowdown has not brought much relief to prospective home buyers, particularly first-time buyers who have had an increasingly hard time getting in the market amidst high prices and rising interest rates.
Home price appreciation will continue to lose speed throughout the end of the year and into 2023. In the Washington DC area, for example, the median home price rose by just 1.4% in November. While there could be localized year-over-year price declines in the coming months, relatively strong demand, low inventory, and declining mortgage rates will keep the overall median home price steady in the year ahead,” Sturtevant concluded.
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“Today’s S&P CoreLogic Case Shiller Index highlights the continued pullback in housing demand this fall, as mortgage rates surpassed 7.0% and inflation left homebuyers with less savings to put toward a down payment,” said George Ratiu, manager of economic research at realtor.com®, in a statement. “Sales of existing homes have declined for ten straight months, signaling that, in the current environment, many homebuyers are tapped out. The index captures price data from the months of August, September and October.
“October saw the average 30-year mortgage rate climb above 7.0%, driving buyers’ monthly payment more than 70% higher than last year. Since then, rates have seen a gradual retreat, nearing the 6.0% mark, as inflation has been pulling back. With the Federal Reserve committed to reining in consumer price growth through additional rate hikes and further balance sheet reduction, there are growing expectations that inflation will moderate even further in 2023.
“As we count down the days to the end of the year, housing markets are feeling the monetary squeeze. Even as would-be sellers are pulling back from listing their properties, the number of homes for sale is growing, as is the number of days a home sits on market waiting for a buyer. With fewer buyers and a growing inventory of discounted listings, the median price continues to retreat from the peak.
“Buyers and sellers are taking a wait-and-see approach to markets, keeping an eye on the direction of the economy. A soft landing in 2023, predicated on the Fed successfully taming inflation without harming employment, could offer a better foundation for economic and real estate activity. However, the downside risks loom large on the horizon,” Ratiu concluded.
