Due to Interest Rate Burden... US Housing Prices Fall for 4 Consecutive Months

[Asia Economy New York=Special Correspondent Joselgina] U.S. housing prices have fallen for four consecutive months. As the burden of mortgage financing increases due to interest rate hikes, forecasts suggest that this downward trend will continue for the time being.

The Wall Street Journal (WSJ) reported on the 27th (local time) that the S&P CoreLogic Case-Shiller Home Price Index fell 0.5% month-over-month in October. Following the first decline in 10 years in July, housing prices have dropped for four consecutive months compared to the previous month. However, the decline was smaller than in September (-1.0%).

[Image source=AP Yonhap News]

The Case-Shiller 10-city home price index fell 0.7% month-over-month, and the 20-city home price index fell 0.8% month-over-month. In particular, the price drops in western cities such as Las Vegas (-1.8%), San Francisco (-1.7%), and Phoenix (-1.6%) were notable.

The continued month-over-month decline in U.S. home prices is attributed to the Federal Reserve's interest rate hikes. As financing costs increase, housing demand itself has weakened. The average 30-year mortgage rate, which was around 3% at the beginning of the year, surpassed 7% in October and November. Although it has recently eased slightly, it remains in the 6% range, higher than at the start of the year.

Craig Lazzara, Managing Director at S&P Dow Jones Indices, explained, "As the Fed continues to raise rates, mortgage financing is becoming a headwind for home prices," adding, "Given the expectation that the challenging macroeconomic environment will persist, home prices are bound to remain weak."

Many economists expect the downward trend in home prices to continue. Although U.S. home prices are still rising year-over-year, some predict that a year-over-year decline will appear during 2023, WSJ reported.

The year-over-year increase in home prices for the top 10 cities was 8.0%, and for the top 20 cities, it was 8.6%. According to the National Association of Realtors, the median price of existing homes in November rose 3.5% year-over-year to $370,700.

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