Due to Interest Rate Burden... US September Housing Prices Decline for 3 Consecutive Months

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] U.S. housing prices have fallen for three consecutive months. This decline is the first in about four years.

The Wall Street Journal (WSJ) reported on the 29th (local time) that the S&P CoreLogic Case-Shiller Home Price Index dropped 1.0% month-over-month in September. Following the first decline in 10 years in July, home prices have fallen for three consecutive months compared to the previous month. The total decline over the past three months amounts to 2.6%. The September drop was similar to August's (-1.1%).

The home price index for 10 major cities fell 1.4% month-over-month, and the index for 20 major cities fell 1.5%. Particularly, western cities such as San Francisco and Seattle led the decline with drops close to 3%. WSJ noted that this is the first time in about four years that home prices have fallen for three consecutive months compared to the previous month.

WSJ conveyed the sentiment that "due to the sharp rise in mortgage rates this year, many buyers have been pushed out of the market, reversing the upward trend in home prices." The Federal Reserve's rate hikes have increased financial costs, weakening demand. The 30-year fixed mortgage rate, which was around 3% at the beginning of the year, surpassed 7% last month and has recently hovered around 6%.

However, compared to a year ago, home prices are still on the rise. The September index increased 10.6% year-over-year. But since the growth rate has slowed from the previous month (12.9%), experts predict that home prices will decline year-over-year in 2023.

Craig Lazzara, Managing Director at S&P Dow Jones, stated, "As the Fed continues to raise the benchmark interest rate, mortgage financing costs have become more expensive, making it harder to buy a home," and added, "Considering the macroeconomic outlook, home prices will continue to weaken."