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Slowing down: Home price appreciation dips to lowest rate in 4 years
Two reports find high interest rates are taking a toll on homebuyers' purchasing power
Is now the time to buy or sell? Nationwide, home price appreciation slowed as high interest rates continue to take a toll on purchasing power.
A new Redfin report found that the increase in home prices slowed in August to 4.7 percent, down from 7.6 over the same month in 2017, according to a report in Inman. That was the lowest rate in four years. Redfin also found that home sales dropped 2.4 percent year over year.
In a report released Tuesday, S&P CoreLogic Case-Shiller showed similar results. Home appreciation slowed to an 11-month low in 20 U.S. cities, according to July year-over-year numbers. The rate fell to 5.9 percent year over year, from 6.4 percent in July 2017, according to Bloomberg.
But some cities posted better results than others. Los Angeles showed a 6.4 percent increase, beating the nationwide average.
Miami showed a 5.0 percent increase, while New York and Chicago each saw dramatic slowdowns from July 2017, each with 3.0 percent increases.
Which cities saw the sharpest rise in home prices year over year: Las Vegas was tops with 1.37 percent, followed by Seattle at 12.1 percent and San Francisco at 10.8 percent. But those were the outliers.
“The slowing is widespread,” said David Blitzer, chairman of the S&P index committee. “Fifteen of 20 cities saw smaller monthly increases in July 2018 than in July 2017.”
Both reports cited an increase in interest rates, which are reaching their highest point since 2011, as contributing causes.
“While [home] sale prices moderate, new listing prices keep accelerating,” said Redfin senior economist Taylor Marr. “This mismatch between seller expectations and reality is fueling an increase in price drops in metros across the country.”
One Redfin agent in Portland, Oregon, said the Federal Reserve’s planned December rate hike would chop away at purchasing power for homebuyers even further. “I don’t have a crystal ball, but I wouldn’t count on your home appreciating and being worth more in the spring than it is now,” said the agent, Rebecca Walter.
The findings speak to a high number of sellers shaving off the asking prices on their homes. Last month, a Zillow report found that 14 percent of home prices across the U.S. saw a price drop in June. [Inman, Bloomberg] — David Jeans