The U.S. housing market continued to sag in October as the impact of higher mortgage rates and concerns over the economy rattled buyers and sellers.
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.
Seattle once again ranked among the fastest cooling markets in the country.
From September to October, Seattle-area prices dropped 1%.
On an annual basis, Seattle-area prices in October were up 4.5% over the previous year, the second smallest increase among the 20 cities the index tracks. (San Francisco had the smallest price jump at 0.6%.)
After years of double-digit percentage price growth earlier in the pandemic, Seattle’s 4.5% price jump in October was the area’s smallest annual increase since December 2019.
The index tracks single-family home prices in portions of King, Snohomish and Pierce counties and lags by two months.
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. With borrowing costs roughly double where they were at the start of the year, and inflation leaving less savings to put toward a down payment, homebuyers have pulled back. Sellers are also reluctant to list their properties, yet houses that are on the market are lingering and getting discounted as demand slumps.
“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. A nationwide gauge was up 9.2% in October from a year earlier, down from 10.7% in September.
The largest annual price increases were in Miami; Tampa, Florida; and Charlotte, North Carolina. In Miami, prices gained 21% year over year.
Seattle Times real estate reporter Heidi Groover contributed to this report.