US Home Prices Fall for Two Consecutive Months... Biggest Drop in 13 Years in Major Cities

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The decline in U.S. home prices continues. In major cities, the drop in home prices recorded the largest decline since 2009. The overall housing market is rapidly cooling due to rising interest rates and the resulting slowdown in demand.

On the 25th (local time), according to S&P Dow Jones Indices, a global market index provider, the seasonally adjusted S&P CoreLogic Case-Shiller Home Price Index measuring the average home price trend in major U.S. cities fell 0.9% from the previous month in August. This marks the second consecutive month of home price declines since July, when prices turned downward for the first time in 10 years. The decline was also much larger than in July (0.2%).

In particular, Bloomberg reported that the 20-city home price index fell 1.3% from the previous month, marking the largest drop in 13 years since March 2009. The 10-city home price index also decreased by 1.3%.

All 20 cities saw declines. Especially, expensive West Coast metropolitan areas such as San Francisco (-4.3%), Seattle (-3.9%), and San Diego (-2.8%) led the downward trend.

U.S. home prices continue to rise compared to the same period last year, but the rate of increase has slowed. The August home prices rose 13% compared to a year ago, narrowing from 15.6% in July. The year-over-year increase in the 10-city home price index fell from 14.9% in July to 12.1% in August, and the 20-city home price index's increase dropped from 16% in July to 13.1% in August.

This is interpreted as the effect of weakened demand due to the Federal Reserve's aggressive interest rate hikes. The 30-year fixed mortgage rate, which was only about 3% at the beginning of the year, recently surpassed 7%. Craig Lazzara, Managing Director at S&P Dow Jones, said, "The decline in U.S. home prices mentioned in last month's report has continued," adding, "It clearly shows that the home price growth peaked this spring and has been declining since."

Earlier, the National Association of Realtors (NAR) reported that existing home sales in September decreased by 1.5% from the previous month to 4.71 million units (annualized), marking the eighth consecutive month of decline. This is the lowest level since May 2020 and, excluding the early COVID-19 pandemic lockdown period, the lowest since September 2012.

This content was produced with the assistance of AI translation services.