Prices

Report: US Home Prices Cool at Record Rate

SEP 28 2022·Updated SEP 29 2022

Story

Image credit: Getty Images [via Business Insider]

The Facts

According to the S&P CoreLogic Case-Shiller index, US house prices logged a 15.8% increase in July over the same month in 2021, lower than the 18.1% annual increase recorded in June and the fastest slowdown of gains on record.
Business Insider
The cooldown in the market comes as mortgage rates have surged — with the 30-year-fixed mortgage breaching 6% in September for the first time since the 2008 crash — and as the Federal Reserve (Fed) continues to rate hikes in response to record-high inflation.
New York Post
Although mortgage rates aren't directly tied to the federal funds rate, they often increase as the Fed hikes rates.
ITN
Last month, consumer price inflation remained near a 40-year high of 8.3%, yet had dropped from 8.5% in July to 9.1% in June.
wsj
Some analysts suggest markets are reacting to expectations that the Fed will raise its benchmark rate to approximately 4.5% by the end of the year in an attempt to curb inflation.
Bloomberg.com

Sources Split

LEFT

CENTER

RIGHT

ESTAB
CRIT

CENTER

PRO
ESTAB

The Spin

Narrative A

While it might not be equivalent to the 2008 crash, the US housing market is headed toward a significant decline in both home buying and home construction. Anyone who recently bought a house to beat the Fed interest rate hikes will now be sitting at a loss, and home prices will only drop further, essentially depleting the market.

New York Post

Narrative B

Since homebuying demand is low right now, it has given industries like homebuilding material suppliers and homebuilders freedom from the overwhelming pandemic-era demand and turbulence that drove up prices. The drop in demand will drop home prices, correcting the market and eventually bringing the US housing market back to normal.