According to the S&P Case-Shiller indices, home prices fell 2.5% from July to August.
SAN DIEGO COUNTY, Calif. — San Diego home prices are falling and we’re seeing a record slowdown across the country.
According to the S&P Case-Shiller Indices, house prices fell 2.5% from July to August. San Diego County hasn’t seen such a significant drop since July 2008.
According to realtor.com, In August, the median sales price for a single-family home was $900,000. During the pandemic, the median sales price of a single-family home hovered around $670,000. Annual price growth for San Diego is 12.7% and 13% nationally, according to S&P Case-Shiller indices.
US long-term average mortgage rates rose this week ahead of another expected rate hike by the Federal Reserve when it meets early next month, according to the associated press.
Mortgage buyer Freddie Mac reported last week that the key 30-year average rate rose this week to 6.94% from 6.92% last week. Last year at this time, the rate was 3.09%.
The average rate on 15-year fixed-rate mortgages, popular with those looking to refinance their homes, jumped to 6.23% from 6.09% last week. Last week it rose more than 6% for the first time since the 2008 housing market crash. A year ago, the 15-year rate was 2.33%.
The Fed’s aggressive action has stalled a housing sector that, outside of the start of the pandemic, has been hot for years.
The National Association of Realtors said sales of previously occupied American homes fell in september for the eighth month in a row, as home seekers faced sharply higher mortgage rates, inflated home prices and a limited supply of properties on the market.
Sales fell 23.8% from September last year and are now at the slowest annual pace since September 2012, excluding the sharp sales slowdown that occurred in May 2020 near the start of the pandemic.
Freddie Mac says that for a typical mortgage, borrowers who stayed at the higher end of the rate range over the past year would pay several hundred dollars more than borrowers who signed contracts at the lower end of the range.
In late September, the Federal Reserve raised its benchmark lending rate for another three quarters of a point in an effort to constrain the economy and control inflation. It was the Fed’s fifth increase this year and the third consecutive increase of 0.75 percentage point. The Fed’s next two-day policy meeting begins on November 1, with most economists expecting another big three-quarter point hike.
Despite the Fed’s sharp and rapid rate hikes, inflation hardly moved from 40-year highs and the labor market remains tight.
Earlier this month, the government reported that US employers cut their hiring in September, but still added 263,000 jobs. The unemployment rate fell to 3.5%, matching a half-century low.
Another government report last week showed that consumer inflation stood too high to 8.2%. Combined with inflation of 8.5% at the wholesale level, most economists expect another big increase when the Fed meets in early November.
By raising lending rates, the Federal Reserve makes it more expensive to get a mortgage and a car or business loan. So consumers and businesses presumably borrow and spend less, cooling the economy and slowing inflation.
Mortgage rates don’t necessarily reflect Federal Reserve rate increases, but they do tend to track the yield on the 10-year Treasury note. That’s influenced by a variety of factors, including investor expectations about future inflation and global demand for US Treasuries.
Despite a still strong labor market, the government estimates that the US economy decreased by 0.6% annual rate in the second quarter ending in June, the second consecutive quarterly contraction.
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