The S&P Case-Shiller Home Price Indices for July showed a sharp slowing in home price growth from June to July. National home price growth slowed from June’s reading of 18.7 percent year-over-year growth to 16.10 percent home price growth in July. This reading translated to an 0.20 percent loss in month-to-month home price growth.

The S&P Case-Shiller 20-City Home Price Index fell 0.40 percent in July after increasing by 0.40 percent in June. This was the first time since March 2012 that the 20-City Home Price Index posted a decreasing pace of home price growth; all 20 cities posted slower year-over-year home price growth in July than in June.

Seven cities in the 20-City Index posted higher home price gains in July as compared to June. Demand for homes exceeds supply in many areas; limited availability of homes, rising mortgage rate, and high home prices have discouraged would-be home buyers. Analysts said that home prices fell due to rising mortgage rates impacting affordability. Craig J. Lazzara, managing director for S&P Dow Jones Indices, said that the slowing pace of home price growth in July was the “largest deceleration in the history of the Index.”

Cities that previously enjoyed rapidly rising home prices experienced a marked slowing in home price growth. Home price growth fell by 3.50 percent in San Francisco, California, and Seattle, Washington reported a 3.10 percent decline in home price growth. Home price growth in San Diego, California decreased by 2.50 percent in July. Cities posting gains in home prices included Miami, Florida with month-to-month home price growth of 1.30 percent; Home prices in Cleveland, Ohio rose by one percent, and Home prices in Chicago, Illinois rose by 0.70 percent.

FHFA Reports Home Price Growth in All Regions

The Federal Housing Finance Agency, which oversees government-sponsored mortgage lenders Fannie Mae and Freddie Mac, reported that year-over-year home prices rose for all nine census divisions and ranged from 10 percent growth in the Pacific region to 18.90 percent growth in the South Atlantic region. FHFA data is based on home sales connected with purchase money mortgages owned or guaranteed by Fannie Mae and Freddie Mac.

Last week’s economic reporting included readings on housing markets, building permits issued, housing starts, and sales of previously-owned homes. The Federal Reserve released its scheduled monetary policy statement and gave a  press conference with Fed Chair Jerome Powell. Weekly readings on mortgage rates and jobless claims were also published.

NAHB: Home Builder Confidence In Housing Markets Lags for 9^th Consecutive Month

The National Association of Home Builders reported lower builder confidence in housing markets in September; this was the ninth straight month that builder confidence fell. Readings of 50 and above indicate that most home builders surveyed reported positive views of the U.S. housing market.  Excluding readings during the pandemic, September’s reading was the lowest measure of builder confidence since May of 2014.

Component readings for the monthly housing market confidence reading were also lower in September. Builder confidence in housing market conditions over the next six months fell by one point and confidence in prospective buyer traffic in housing developments was also one point lower.

All four NAHB regions reported lower builder confidence readings in September than in August. The western region reported a ten-point drop in builder confidence and the southern region saw builder confidence in housing markets drop by seven points. The midwestern and northeastern regions each reported a drop of five points in builder confidence in September. Rising mortgage rates and home prices contributed to the dip in homebuilder confidence.

Federal Reserve Raises Target Rate Range and Mortgage Rates Follow

The Federal Reserve raised its target interest rate range again in an attempt to slow rapid inflation. The target interest rate range was raised by 0.75 percent to a range of 3.00 to 3.25 percent. The Federal Reserve has a dual mandate of maintaining inflation at or near two percent and achieving maximum employment.

Freddie Mac reported higher average mortgage rates last week. Rates for 30-year fixed-rate mortgages averaged 6.29 percent and were 27 basis points higher than in the previous week. Rates for 15-year fixed-rate mortgages rose by 23 basis points on average to 5.4 percent. Rates for 5/1 adjustable rate mortgages averaged four basis points higher at 4.97 percent. Discount points averaged 0.90 percent for 30-year fixed-rate mortgages and 1 percentage point for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.40 percent.

Initial jobless claims rose to 213,000 new claims filed as compared to the prior week’s reading of 208,000 claims filed.

What’s Ahead

This week’s scheduled economic reports include readings from S&P Case-Shiller Home Price Indices along with reports on pending home sales and inflation. Weekly readings on mortgage rates and jobless claims will also be released.