Soaring U.S. Home Prices See First Decline in 3 Years

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The soaring U.S. housing prices have turned into a downward trend.

Black Knight, a mortgage software, data, and analytics company, announced on the 24th (local time) that U.S. home prices fell by 0.77% last month compared to June.

This is the first monthly decline in home prices in three years. The economic media CNBC reported that this decline is the largest since January 2011. For July, it is the second-largest drop since 1991.

By region, home prices in western cities such as San Jose (-10%), Seattle (-7.7%), San Francisco (-7.4%), San Diego (-5.6%), Los Angeles (-4.3%), and Denver (-4.3%) showed significant decreases.

This downward trend in home prices is interpreted as a result of demand freezing due to soaring prices after the COVID-19 pandemic and rising mortgage rates. The 30-year fixed mortgage rate, which was only about 3% at the beginning of the year, surpassed 6% in June and is currently moving around 5.75%.

Black Knight stated, "Americans' ability to purchase homes is at its lowest in 30 years," adding, "Assuming a 20% down payment and financing the rest with a 30-year fixed mortgage, homebuyers must spend 32.7% of the median household income, which is a 13 percentage point increase compared to just before the COVID-19 pandemic." The 25-year average was 23.5%.

Meanwhile, earlier, the U.S. National Association of Realtors (NAR) announced that the median price of existing homes in July was $403,800, down $10,000 from the record high in June.

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