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Home-price gains continued slowing in September, another sign that rising mortgage rates are helping sap the momentum out of the housing market.
The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 5.5% in September, down from the 5.7% year-over-year increase reported in August.
Price gains accelerated for most of the last two years, growing significantly faster than both incomes and inflation. But in recent months price growth has been steadily slowing as interest rates have risen and inventory in some markets has been growing.
“Home prices plus data on house sales and construction confirm the slowdown in housing,” said David Blitzer, managing director at S&P Dow Jones Indices.
The Case-Shiller 10-city index gained 4.8% over the year, down from 5.2% the prior month. The 20-city index gained 5.1%, down from 5.5% the previous month.
Las Vegas had the fastest home price growth at 13.5%. It was followed by San Francisco, where prices grew 9.9%, and Seattle with an 8.4% annual increase.
Just four out of 20 cities reported greater annual increases in September than in August. The few places that are seeing price growth accelerate are ones that were hardest hit by the downturn, including Las Vegas, as well as Phoenix and Tampa.
More than five years of rapidly rising prices, combined with higher mortgage rates are making homes increasingly unaffordable for buyers. Rates for a 30-year mortgage averaged 4.81% last week, up nearly a full percentage point from the beginning of the year, Freddie Mac said last Thursday.
Most sectors of the housing market are slowing, including new home sales and housing starts.
Existing home sales posted their largest annual decline since 2014 in October, but did rebound somewhat compared with a month earlier, the National Association of Realtors said last week. Lawrence Yun, the trade group’s chief economist, said sales seem unlikely to rebound in the short term.
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