On September 22, 2022, in Los Angeles, California, a “for sale” sign is displayed outside a single-family home.
Allison Dinner | Getty Images
US home prices fell in July at the fastest pace in the history of the S&P CoreLogic Case-Shiller Index, according to a new report released Tuesday.
House prices were still higher in July than a year ago, but fell significantly due to the increases in June. According to the report, prices rose 15.8% nationally in July 2021, well below the 18.1% increase in the previous month.
The 10-City composite was up 14.9% year-on-year, from 17.4% in June. The 20-City composite gained 16.1%, down from 18.7% in the previous month. July’s year-over-year gains were lower than June’s in each of the cities covered by the index.
“July’s report reflects a significant slowdown,” Craig J. Lazzara, managing director at S&P DJI, wrote in a press release, noting the difference in annual profits in June and July. “The -2.3% difference between those two monthly win rates is the biggest slowdown in the history of the index.”
Tampa, Miami and Dallas saw the highest annual gains of the 20 cities in July, at 31.8%, 31.7% and 24.7%, respectively. Washington, DC, Minneapolis and San Francisco saw the smallest gains, but were still well above the level of a year ago.
Another report from the National Association of Realtors showed that house prices fell dramatically from June to July. Due to the strong seasonality of the housing market, prices usually fall during that time, but the decline was three times greater than the average decline in the past.
The share of homes with price cuts reached about 20% in August, according to Realtor.com, the same as in 2017.
“For homeowners planning to be on the list, today’s market is significantly different than it was even three weeks ago,” said George Ratiu, senior economist and manager of economic research for Realtor.com.
House prices are falling because affordability has drastically declined due to rapidly rising mortgage rates. The average interest rate on the popular 30-year fixed mortgage started around 3% this year, but briefly rose above 6% in June. It stayed within the high 5% range in July and is now approaching 7%, bringing the average monthly payment about 70% higher than a year ago.
“As the Federal Reserve continues to raise interest rates, mortgage financing has become more expensive, a process that continues to this day. Given the outlook for a more challenging macroeconomic environment, house prices may continue to fall,” Lazzara said.