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Home prices show biggest monthly decline in over a decade 

The latest data from Case-Schiller and FHFA highlights the slowdown's impact on home prices, with the greatest declines in West Coast markets.

October 25, 2022
3 minutes

Key points:

  • While home prices remain up year-over-year nationally, the drop in recent months is significant.
  • Sales, prices are expected to continue a downward trend during the winter months.

While it’s clear the residential real estate market has cooled, two new reports are shedding light on the extent of the slowdown in home price growth.

Here’s what the data released on October 25 indicates.

Case-Schiller

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index found that while home prices were up 13% year-over-year in August, the market continued a significant month-to-month decline, falling 1.1% between July and August. That’s the biggest month-to-month decline since December 2011, according to the Wall Street Journal. Percentages are based on non-seasonally adjusted data. All 20 cities in the report showed declines both before and after seasonal adjustments.

The overall downward trend should continue for at least the short-term, said George Ratiu, senior economist at Realtor.com.

“With inflation still running high, and seemingly unaffected by this year’s monetary tightening, the Federal Reserve will continue to push the funds rates higher,” Ratiu said in a statement commenting on the Case-Schiller data. “In turn, mortgage rates will climb through the end of 2022, further clamping down on buyers’ ability to afford a home. As we move into the colder months of the year, we can expect further declines in home sales and continued downward adjustment in prices.”

Among the major cities studied in the Case-Schiller report, the biggest drops in prices are happening on the West Coast. San Francisco experienced the most significant decline, dropping 4.3% between July and August. It was followed by Seattle (down 3.9%) and San Diego (down 2.8%).

While every city studied experienced some month-to-month price decline, metros with the smallest drops were Cleveland and Miami (both down 0.1%), followed by Charlotte (down 0.3%) and Atlanta (down 0.4%).

Federal Housing Finance Agency

The Federal Housing Finance Agency price index uses a different data set but found a similar trend. The FHFA report, which looks at purchase-only data from Freddie Mac and Fannie Mae, estimates seasonally adjusted home prices fell 0.7% from July to August, rising 11.9% year-over year. It’s the first time since March 2011 that the index has seen two straight month-to-month declines.

Similar to the Case-Schiller report, the Pacific/West Coast region is seeing the biggest price growth slowdown year-over-year. Between August 2021 and August 2022, West Coast home prices rose just 7.4%, well below the 11.9% national average, according to FHFA data. Between August 2020 and August 2021, the annual increase in the region’s home prices was nearly three times that amount at 21.3%. 

Though prices were down or flat on a month-over-month basis, all other U.S. regions experienced annual price growth increases of 10% or more, with the South Atlantic region faring the best at 16.2% year-over-year growth.

Write to Dave Gallagher.

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