(Bloomberg) — The US housing market continued to deteriorate in October as the impact of rising mortgage rates and concerns about the economy unnerved buyers and sellers.
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Prices fell 0.5% from September, the fourth consecutive monthly decline for a seasonally adjusted measure of home prices in 20 large cities, according to the S&P CoreLogic Case-Shiller Index.
The market began turning lower earlier this year as the Federal Reserve began raising its benchmark interest rate, with the aim of easing high inflation that was driven in part by skyrocketing housing costs.
The Freddie Mac data showed that rates for 30-year fixed mortgages reached 7.08% in October – and again in November – although they have since eased. With borrowing costs nearly double what they were at the start of the year, and inflation has reduced the savings that need to be made toward a down payment, homebuyers have backed off. Sellers are also reluctant to list their properties, however homes on the market remain and are discounted as demand drops.
Read more: Housing enters deep freeze as buyers and sellers are sidelined
“As the Federal Reserve continues to raise interest rates, mortgage financing continues to be a headwind to home prices,” Craig Lazzara, managing director at S&P Dow Jones Indices, said in a statement Tuesday. “Given the ongoing outlook for a challenging macroeconomic environment, prices may continue to weaken.”
Even with prices falling on a monthly basis, they are still higher than they were a year ago, although the rate of gain is lower. A national measure rose 9.2% in October from a year earlier, down from 10.7% in September.
In the 20-city index, the largest annual price gains were in Miami. Tampa, Florida; and Charlotte, North Carolina. In Miami, prices are up 21% year over year. San Francisco saw the smallest increase, at 0.6%.
In October from September, prices fell the most in Las Vegas and Phoenix, with declines of 1.3% and 1.2%, respectively, according to the seasonally adjusted index. Miami, San Francisco, and Dallas all saw declines of 0.9% month over month.
(Updates with the biggest monthly drop in the last paragraph.)
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