Case-Shiller home price index continues to contract as demand recoils rapidly
US housing prices experienced a “forceful deceleration” in August, according to the latest S&P CoreLogic Case-Shiller National Home Price NSA Index.
The index – covering all nine US census divisions – slowed to a 13% annual pace in August, down from 15.6% in July. Craig Lazzara, managing director at S&P DJI, noted that the -2.6% difference between those two monthly rates of change is the largest deceleration in the history of the index, with July’s slowdown now ranking as the second largest.
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“The forceful deceleration in US housing prices that we noted a month ago continued in our report for August 2022,” Lazzara said. “We see similar patterns in our 10-City Composite (up 12.1% in August vs. 14.9% in July) and our 20-City Composite (up 13.1% in August vs. 16.0% in July). Further, price gains decelerated in every one of our 20 cities. These data show clearly that the growth rate of housing prices peaked in the spring of 2022 and has been declining ever since.”
“Housing markets continue to be rattled by the continual rise in mortgage rates,” CoreLogic deputy chief economist Selma Hepp added. “With home buying demand recoiling rapidly, home price appreciation has slowed considerably across many markets, particularly those in the West Coast and Mountain West where high mortgage rates are crushing affordability.”
While all 20 cities experienced price deceleration in August, Miami (28.6%), Tampa (28%), and Charlotte (21.3%) registered the highest annual increases. On a month-over-month basis, the biggest declines occurred in San Francisco (-4.3%), Seattle (-3.9%), and San Diego (-2.8%).
“Nevertheless, divergences still exist, with affordable areas in the South and Southeast continuing to thrive as outmigration from more expensive markets persists,” Hepp said. “Though, continued slowing of home price growth will characterize housing markets across the country with forecast for most in low single digits by early next year.”
“As the Federal Reserve moves interest rates higher, mortgage financing becomes more expensive, and housing becomes less affordable,” said Lazzara. “Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to decelerate.”
“At this pace, CoreLogic’s Home Price Index forecast suggests annual home price growth will slow to 9% by December and further down to less than 1% by the end of the first quarter 2023,” Hepp said.
