Housing: Home price growth slowed by record amount in July
Home price growth in the U.S. slowed by the largest amount on record in July, clocking in the fourth straight month of deceleration. But values remain markedly higher year over year.
A national measure of prices in July rose 15.8% over the same month last year, the S&P CoreLogic Case-Shiller index showed Tuesday. That’s down from June, which showed an 18% annual gain.
The 20-city composite increased 16.1%, down from 18.6% in June and far lower than the consensus estimate from Bloomberg of 17.35%.
“Although U.S. housing prices remain substantially above their year-ago levels, July’s report reflects a forceful deceleration,” Craig J. Lazzara, managing director at S&P DJI, wrote in a press release. “For example, while the National Composite Index rose by 15.8% in the 12 months ended July 2022, its year-over-year price rise in June was 18.1%. The -2.3% difference between those two monthly rates of gain is the largest deceleration in the history of the index."
The figures underscore how quickly the housing market has cooled off from the pandemic-era frenzy. Price growth is expected slow even further because rates moved even higher, but the double-digit annual price gains still remain unaffordable for many would-be buyers.
Tampa, Miami, and Dallas posted the highest year-over-year gains among the 20 cities in July, with Tampa leading at 31.8%, followed by Miami at 31.7%, and Dallas at 24.7%.
All 20 cities posted lower price increases year over year in July.
In July, mortgage rates oscillated between 5.30% and 5.54%, slightly lower than the 5.81% registered in June. Since then, though, rates have taken off, with the rate on the 30-year mortgage hitting 6.29% last week. That's more than double the 2.88% rate the same time a year ago.
“As the Federal Reserve continues to move interest rates upward, mortgage financing has become more expensive, a process that continues to this day. Given the prospects for a more challenging macroeconomic environment, home prices may well continue to decelerate," Lazzara wrote in a statement.
More recent data has shown further cooling, with sales of previously owned homes dropping for the seventh month in a row in August and the median sales price falling for the second straight month to $361,500. That's down $24,000 from the record high of $413,800 in June, according to the National Association of Realtors.
Home builders, too, have taken more drastic measures to entice homebuyers by offering price reductions, mortgage rate buy-downs, and free amenities, according to the National Association of Home Builders. Permitting for new single-family home construction has also collapsed.
New home sales for August is set to come out later Tuesday with data on pending sales of existing homes for August — a leading indicator of the housing market's health — on the docket for Wednesday.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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