EDITOR'S NOTE: Home prices decline: By now, you should be aware of the fact that we’re in a housing recession. Home prices are crashing, mortgage rates are skyrocketing, and many of the homes for sale are being listed at a price far above their “livable” quality and value. At least in this segment of the economy, the Fed’s rate hikes are working, as home prices are deflating. Yet, it’s only one big fraction of the economy. The job market is still showing growth, and we’ll find out this Friday whether the Employment Situation report confirms what Wall Street fears. In other words, there’s plenty of space in the economy for inflation to rise despite the Fed’s aggressive efforts to bring it down. Hopefully, you’ve been hedging against both the likelihood of a continuing inflationary surge and a deep recession. We won’t know for months whether the Fed’s tightening program will have made a sufficient impact on the economy. In the meantime, Americans’ financial prospects are rife with extreme uncertainty and risk. It’s up to you whether you choose to allocate some of your funds to a safe haven or whether you decide to remain fully exposed to negative volatility.
Home prices in the US have taken a turn and are now posting the biggest monthly declines since 2009.
Median home prices fell 0.98% in August from a month earlier, following a 1.05% drop in July, mortgage-data provider Black Knight Inc. said in a report Monday. The two periods mark the largest monthly declines since January 2009.
“Together they represent two straight months of significant pullbacks after more than two years of record-breaking growth," said Ben Graboske, Black Knight Data and Analytics president.
The housing market is losing steam fast with skyrocketing mortgage rates driving affordability to the lowest level since the 1980s. The Federal Reserve has sought to curb inflation, which has thrown cold water on the US real estate boom.
While prices are falling on a month-over-month basis, they’re still significantly higher than a year earlier when the buying frenzy was going strong. Values were up 12.1% from a year earlier in August.
The sharpest correction in August was in San Jose, California, down 13% from its 2022 peak, followed by San Francisco at almost 11% and Seattle at 9.9%, the company said.
It’s not just buyers who are stepping away from the fast-cooling market. The doubling of rates has disincentivized would-be sellers from giving up historically low rates. Inventory was on the rise from May to July but stalled in August, according to Black Knight.
This story has been published from a wire agency feed without modifications to the text.
Originally published on Live Mint.