Residential prices data released in the US showed a geographically widespread deceleration for the month of September.
As lagged indicators, the latest Case-Shiller Home Price indexes reflect the Fed’s hawkishness and diminishing affordability due to rising mortgage rates. 30-year fixed mortgages now stand well over 7%, which I covered in an earlier piece for Invezz that can be viewed here.
The 10-city, 20-city and national S&P CoreLogic Case-Shiller index for the month of September moderated -1.4%, -1.5% and -1.0%, respectively since August.
Over the past 3 months, the changes stand at -3.9%, -3.9% and -2.6%, respectively, signalling easing prices across geographically dispersed urban centres during the quarter.Source: S&P
Interestingly, all 20 cities showed a deceleration in September readings over the rise in August, re-enforcing the widespread downtrend.Source: S&P
On seasonally adjusting monthly data, the 10-city, 20-city and national index showed declines of -1.2%, -1.2% and -0.8%, respectively.
On an annual basis, the 10-city, 20-city and national increased by 9.7%, 10.4% and 10.7%, respectively.
The rise in the national index eased from 12.9% in the previous month.
The 20-city data point was below the Wall Street Journal’s reported estimate of 10.9% and moderated from a rise of 13.1% in August.
Miami, Tampa and Charlotte repeated their performance as the highest YoY gainers with increases of 24.6%, 23.8% and 17.8%, respectively.
San Francisco showed the weakest price rise of 2.3%.
S&P analysts noted that in the case of all three indexes, the trend seems to have peaked around 6 months ago and has since entered a decelerating phase.Source: S&P Global
Of note, on a seasonally adjusted basis, the 10 -city, 20-city and national index is currently 40%, 48%, and 63%, respectively above the 2006 bubble peak.
The Federal Housing Finance Agency (FHFA) data showed a rise of 12.4% in Q3 on a YoY basis.
In line with the Case-Shiller index, the quarterly change was nearly flat, rising 0.1% over Q2 2022, signalling a marked slowdown in home prices amid Fed hawkishness.
September data also showed a rise of 0.1% on a monthly basis.
Although prices have increased since last year, and are significantly higher than the 2006 peak, the trend has certainly entered sluggish territory across all zones in the country.
Future trends will depend heavily on the Fed’s rate decisions going forward.
Fed President James Bullard expects rates to shift above 5% and stay elevated into even 2024. If so, the affordability of houses will diminish further and we could see prices decline even more, which is likely to remain a widespread phenomenon.
Must-watch data releases will include the jobs data which will be available on 2nd December and the US CPI which will be released on the 12th of December, before the Fed’s final monetary policy announcement on the year on 14th December.
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