Home Prices on the Decline
A recent report has shown that home prices in the United States have fallen by 2.2% since reaching their peak in June. However, this decrease in prices has not been consistent across all areas of the country, as illustrated by a map detailing the changes in price.
In September alone, home prices experienced a 1% decline, marking the third consecutive month of decreases according to the S&P CoreLogic Case-Shiller Home Price Index. Although prices have still seen a 10.6% increase over the past year, certain cities have seen a significant drop from their peak back in June.
The surge in prices that occurred during the pandemic has recently started to reverse course, largely due to a spike in mortgage rates. The average rate for a 30-year mortgage surpassed 7% in early November, reaching its highest level in 20 years based on data from Freddie Mac. While this rate has since decreased to 6.58%, it remains more than double the average of 3.11% at the start of the year.
With these higher mortgage rates causing monthly payments to soar, many potential buyers are finding homeownership to be increasingly out of reach. This trend is not only impacting individual buyers but is also having a negative effect on the overall housing market.
Matthew Walsh, an associate economist at Moody's Analytics, commented that "The U.S. housing market is struggling under the weight of elevated mortgage payments and limited housing affordability."
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