The pandemic-era boom in the US housing market appears to be coming to an end – with prices decelerating at their fastest annual pace on record in July, according to the latest S&P CoreLogic Case-Shiller Index data released Tuesday.
Home prices were still increasing year-over-year in July, but the rate of growth is falling fast. Prices at the national level rose by 15.8% for the 12 months ending in July, but the rate of increase was down from 18.1% increase in June.
The 2.3% decline in month-over-month growth was the largest deceleration on record for the S&P CoreLogic Case-Shiller Index.
“Although US housing prices remain substantially above their year-ago levels, July’s report reflects a forceful deceleration,” said Craig J. Lazzara, managing director at S&P DJI.
The market has rapidly cooled in recent months as mortgage rates surge in response to the Federal Reserve’s interest rate hikes. As of last week, the average 30-year fixed-rate mortgage was 6.29%, up by a whopping 3.41% since the same week one year ago.
As The Post has reported, rising mortgage rates have further hampered affordability for prospective buyers who already faced the dual crunch of expensive pandemic-era home prices and decades-high inflation.
The Case-Shiller 10-City Composite index, which includes prices in major metro areas such as Boston, Miami and New York, reported an annual increase of 14.9% in July, down from 17.4% the previous month. The 20-year Composite index gained 16.1%, down from 18.7%.
On a monthly basis, home prices actually shrank from June to July. The seasonally-adjusted national index shrank by 0.2%, marking the first declined by that measure since early 2012.
The 10-City composite index fell by 0.5% month-over-month. The larger 20-City Composite index showed a 0.4% monthly decline – the first monthly decrease since March 2012.
Just seven cities tacked in the S&P CoreLogic Case-Shiller Index reported increased home prices in July.
“As the Federal Reserve continues to move interest rates upward, mortgage financing has become more expensive, a process that continues to this day,” Lazzara added. “Given the prospects for a more challenging macroeconomic environment, home prices may well continue to decelerate.”
Tampa outpaced all other cities with a 31.8% year-over-year increase in home prices in July. Miami ranked second at 31.7%, followed by Dallas at 24.7%. Washington, D.C., Minneapolis and San Francisco reported the smallest annual gains.
The housing market’s decline has grown worse in the last few months – with some experts now predicting major price decreases by next year. So-called “pandemic boomtowns” that saw surging interest during the COVID-19 pandemic are expected to experience the largest downtick.