close video Housing market is ‘depressed’ and consumers will start pulling back: Fred Lane
Lane Generational founder and CEO Fred Lane predicts ‘persistently high inflation’ over the next four to five years and run ahead of interest rates.
Home prices declined again in September as higher rising mortgage rates sapped demand from the housing market.
Prices slid 1% nationally in September from August, the third consecutive monthly decline, the S&P CoreLogic Case-Shiller index showed on Tuesday. On an annual basis, the index climbed 10.6% in September, down from a 12.9% rate the previous month.
"As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be more expensive and housing becomes less affordable," Craig Lazzara, Managing Director at S&P Dow Jone Indices, said in a statement. "Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to weaken."
The 10-City composite, meanwhile, climbed 9.7% annually, down from 12.1% in August, and the 20-City composite rose 10.4% in September, following a gain of 13.1% the previous month. Price growth slowed in all of the 20 cities.
The Case-Shiller index reports with a two-month delay, meaning it may not capture the latest slowdown in the market.
Even with higher interest rates putting homeownership out of reach for millions of Americans, prices are still steeper than just one year ago.
The interest rate-sensitive housing market has borne the brunt of the Federal Reserve's aggressive campaign to tighten policy and slow the economy. Policymakers already lifted the benchmark federal funds rate five consecutive times and have shown no sign of pausing as they try to crush inflation that is still running near a 40-year high.
The average rate for a 30-year fixed mortgage hovered around 6.58% for the week ended Nov. 23 according to the latest data from mortgage lender Freddie Mac. While that is down from a peak of 7% in September, it's still more than double just one year ago, when rates stood at 3.10%.
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Combined with high home prices, the rapid rise in borrowing costs has pushed many entry-level homebuyers out of the market.
This is a developing story. Please check back for updates.