(ReclaimingAmerica.net) – US home prices have declined for the first time in an entire decade under a critical measurement, the S&P CoreLogic Case-Shiller National Home Price Index.
A 0.2% drop in US home prices was registered in July compared with June on a seasonally adjusted basis, according to the Index, The Wall Street Journal reported, as cited by Newsmax.
The decline in home prices on a month-on-month basis is 0.3%, the first decline since January 2019.
At the same time, though, the national index was still higher annually. In the year ending in July, it increased by 15.8%.
The increase was lower compared with June, when the 12-month surge in home prices stood at 18.1%.
“July’s report reflects a forceful deceleration,” commented Craig Lazzara, managing director of S&P Dow Jones Indices. “
“As the Federal Reserve continues to move interest rates upward, mortgage financing has become more expensive,” he added.
Meanwhile, data from the Mortgage Bankers Association (MBA) showed on Wednesday that the average interest rate on the 30-year mortgage has shot up to 6.52%.
That is the highest level of the most popular home loan in America since August 2008.
The report pointed out that the rising mortgage rates are affecting more and more the housing sector, which is sensitive to the interest rates.
Further developments in that direction are expected as the Fed is taking “aggressive measures” to increase borrowing costs to bring down the sky-high inflation.
The 27-basis-point increase of the 30-year fixed-rate mortgage’s average contact rate registered at the end of last week stands at a level unprecedented in the past 14 years, i.e., since the 2008 Global Financial Crisis and the Great Depression.
“As the Federal Reserve continues to increase the fed funds rate which banks use as a guideline for the interest rates they charge on key banking products, most notable of which is mortgages, home ownership is expected to become much less affordable,” the Wall Street Journal noted.
“The Fed hopes a deliberate slowdown in the housing market will help stanch inflation,” the report added.
In June of this year, the housing-affordability index of the National Association of Realtors fell to its lowest since June 1989.
Home prices decline for first time in a decade. Rising mortgage rates are increasingly weighing on the interest-rate-sensitive housing sector as the Federal Reserve pushes on with aggressively lifting borrowing costs to curb high inflation. https://t.co/YnUE74g9QE
— Newsmax (@newsmax) September 28, 2022