In November, home prices declined as higher consumer demand for new homes was weighed down by home prices.
The S&P CoreLogic Case-Shiller index showed on Tuesday that prices fell 0.1% nationally in the period from October to November, the fifth consecutive monthly decline.
The index climbed 8.2% on an annual basis in November.
The home price data released today does not account for the full impact of rising mortgage rates, which were above 7% in November, and has resulted in a significant pullback in buyer activity, said Lisa Sturtevant, chief economist at Bright MLS. In many local markets across the country, home prices have fallen precipitously from their summer peak as buyers were forced out of the market due to affordability challenges. The 10 city composite increased by 6.3% annually, down from 8% in October, while the 20 city composite rose 6.8% in November, following a gain of 8.6% the previous month. Price growth slowed in all 20 cities.
The Case-Shiller index reports with a two-month delay, meaning it may not capture the latest slowdown in the market.
Even with higher interest rates putting homeownership out of reach for millions of Americans, prices are still steeper than just one year ago.
The median price of an existing home sold in December was $372,700, a 2% increase from the same time a year ago. This marks the 130th consecutive month of year-over-year home price increases, the longest-running streak on record, according to a separate report released last week by the National Association of Realtors.
The aggressive campaign to tighten policy and slow the economy has borne the brunt of the pressure on the interest rate-sensitive housing market. In 2022, policymakers have lifted the benchmark federal funds rate seven times, and they are expected to approve an eighth increase this week, as they try to crush abnormally high inflation.
Mortgage rates are still falling from a peak of 7.08% notched in November. The average mortgage rate fell to 6.15% last week, according to data from Freddie Mac. That remains higher than just one year ago when rates hovered around 3.56%.
The rapid rise in borrowing costs has pushed many entry-level homebuyers out of the market, combined with high home prices.