Annual price growth in the increasingly fragile U.S. housing market slid into the single digits in October for the first time in about two years when mortgage rates that month surged above 7% and further stifled demand, a pair of closely watched surveys showed on Tuesday.
The S&P CoreLogic Case Shiller national home price index increased by 9.2% in October, down from 10.7% in September and notching the first single-digit gain since November 2020. Meanwhile the Federal Housing Finance Agency, which oversees U.S. mortgage-finance entities Fannie Mae and Freddie Mac, said annual home price growth slowed to 9.8% in October from 11.1% in September, marking that index's first non-double-digit gain since September 2020.
"As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices," Craig Lazzara, managing director at S&P DJI, said in a statement. The 30-year fixed mortgage rate breached 7% in October for the first time since 2002, more than doubling in the span of nine months, pulling the rug out from what had been a red-hot housing market fueled by historically low borrowing costs and a rush to the suburbs during the coronavirus pandemic.
While mortgage rates have retreated since early November to an average 6.34% last week, according to data from the Mortgage Bankers Association, they remain well above the 3.31% a year ago at this time and will continue to weigh on the housing sector.
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