Home prices across the United States fell by a large margin in the month of August, while inventory levels stalled, according to a recent report by mortgage analytics firm Black Knight.
The pullbacks have come after two years of “record-breaking growth,” he noted. U.S. home prices saw a decade’s worth of price appreciation in just two and a half years due to factors such as “record-low interest rates” and historically low volatility, he added.
After rising sharply between May and July, inventory levels stalled in August, growing by only a tenth of levels in recent months due to the fact that many sellers stepped away from the market.
“Right now, prospective sellers are not only coming to grips with falling demand and declining prices due to sharply higher interest rates but they also have a growing disincentive to give up their own historically low-rate mortgages in this environment,” Graboske stated.
Fed Action, Investing in a HomeThe housing sector is going through a severe correction as the Federal Reserve has been raising its benchmark interest rates at their fastest pace in decades in a bid to control inflation. The federal funds rate is now in a range of 3.0–3.25 percent, the highest level since before the financial crisis of 2008–09.
“It’s one thing if you’re buying a home to live in it for a very long time, but most people live there for five to 10 years, and then resell it,” Stewart said. “You want to make sure you’re going to make money on that sale.”
U.S. home prices decelerated in July, with the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index falling by 15.8 percent compared to a year ago.
On a monthly basis, July 2022 home prices declined by 2.3 percent from June, which is the largest deceleration in the index’s history.