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Home Prices See First Monthly Decline in Years

From June to July, home prices slid for the first time in years.  This is the latest sign that higher mortgage rates are starting to weigh on home prices in many of the country’s biggest markets.  It will be interesting to see if this has any effect on the mortgage application rates, which are down 29% year over year as of September.

Price Changes

The S&P CoreLogic Case-Shiller National Home Price Index (that measures the average change in home prices, nationwide) fell 0.3% in July from June.  The last time we saw a decrease in this was January 2019.  Even though we saw a decrease month-to-month, home prices are still rising on a year-over-year basis, as seen by the national price index rising 15.8% when looking at July (there is a 2-month delay on this number).

Causes of Price Decrease

Currently, a few factors are causing potential buyers to steer clear of the market for the time being.  Likely the biggest factor is the average rate on a 30-year fixed mortgage being 6.29% for the week ending September 22nd.  This is up 2.88% from the same time a year earlier.  Additionally, the median current home price is up 7.7% in August from the same time a year earlier to $389,500.  Past this, many are also still in fear of the current economic uncertainty as the United States’ top economists continue to grapple with inflation.

Wrap Up

While a slight price drop can be seen as good news for potential buyers, it does not necessarily mean they are going to jump right back into the market.  We will continue to monitor this trend as it plays out to provide a better understanding of the real estate market.  If you have any questions about how changing home prices could affect you, give us a call.

 
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