In the fourth month of slowing US market, home prices slip

(Bloomberg). The US housing market continued to slump in October due to higher mortgage rates and economic concerns that rattled both buyers and sellers.

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Prices fell 0.5% from September, the fourth consecutive monthly decline for a seasonally adjusted measure of home prices in 20 large cities, according to the S&P CoreLogic Case-Shiller index.

The market began downshifting earlier this year as the Federal Reserve started hiking its benchmark interest rate, with the goal of easing high inflation that’s been driven in part by skyrocketing housing costs.

Rates for 30-year, fixed mortgages reached 7.08% in October — and again in November — though they have since retreated, Freddie Mac data show. The cost of borrowing is nearly twice what it was at the beginning, and inflation means that homebuyers have less to save for a downpayment. Sellers are reluctant to list their homes, but houses on the market are still being listed and are getting reduced as the demand drops.

Read more: Housing enters deep freeze as buyers and sellers are sidelined

“As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices,” Craig Lazzara, managing director at S&P Dow Jones Indices, said in a statement Tuesday. “Given the continuing prospects for a challenging macroeconomic environment, prices may well continue to weaken.”

Even as prices fall on a monthly basis, they’re still higher than they were a year ago, though the rate of gains has declined. The national gauge showed an increase of 9.2% in October compared to September’s 10.7%.

The 20-city index showed that the highest annual price increases were recorded in Miami, Tampa, Florida, and Charlotte, North Carolina. In Miami, prices increased 21% over the previous year. San Francisco saw 0.6% growth, the lowest increase.

According to the seasonally adjusted index, October saw the greatest price drop in Phoenix and Las Vegas, which experienced declines of 1.3% & 1.2%, respectively. Each of the three cities saw a 0.9% drop in prices month-over-month.

(Updates with the largest monthly drops in the last paragraph.

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