Publisher's Note: This post appears here courtesy of the The Daily Wire. The author of this post is Ben Zeisloft.
Home prices are falling at a record pace, according to data from S&P Global released Tuesday.
Prices are still up for the year, but the percentage keeps dropping each month. The S&P CoreLogic Case-Shiller Index, which tracks national home prices, reported annual gains at 13% in August, marking a decline from 15.6% in the previous month and the largest plummet in housing costs since the metric was created in 1987.
"As the Federal Reserve moves interest rates higher, mortgage financing becomes more expensive and housing becomes less affordable,"
S&P Managing Director Craig Lazzara said in an analysis. "Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to decelerate."
The central bank raised the target federal funds rate by 0.75% in both June and July before hiking rates by the same amount in September. Policymakers, who conventionally raise and slash rate targets by 0.25% increments, are combating inflation which has reached four-decade highs.
The 30-year fixed mortgage rate has remained below 3% for much of the past two years, according to data from government-backed mortgage company Freddie Mac. Since the beginning of the year, however, the rate has surged from just over 3% to reach 6.9% amid the Federal Reserve's actions, including a jump of nearly 1% in less than one month.
S&P also reported that the 10-City Composite annual increase fell from 14.9% in July to 12.1% in August, while the 20-City Composite annual increase fell from 16.0% to 13.1%. The largest declines in housing prices came from San Francisco, Seattle, and San Diego.
Many cities on the West Coast are witnessing price increases in rental markets as would-be homebuyers search for apartments to avoid contending with elevated real estate prices. For example, the average rent for a one-bedroom apartment is presently $3,100 in San Francisco.
"These data show clearly that the growth rate of housing prices peaked in the spring of 2022 and has been declining ever since,"
Despite the nationwide trend of falling home prices, the cities of Miami, Tampa, and Charlotte saw the highest price increases among the 20 cities analyzed by the S&P index. Home prices in Miami have increased 28.6% year-over-year, while prices in the latter two cities have respectively increased 28.0% and 21.3%.
Florida saw the nation's largest net domestic migration between July 2020 and July 2021, with more than 220,000 people moving to the state, according to data from the Census Bureau. Florida was followed by Texas and Arizona, while New York, California, and Illinois led the nation in terms of numeric decline. Analysts have pointed to the speed at which state governments rescinded lockdown orders over the past two years as a factor behind varying degrees of resilience in local economies.
Rising housing prices derive from persistent supply chain issues and labor shortages, both of which have contributed to inflationary pressures. In the second quarter of 2022, the median sale price of a home was $440,300, according to data from the Department of Housing and Urban Development, marking a 36% rise from $322,600 in the second quarter of 2020.
The National Association of Home Builders recently admonished President Joe Biden for claiming that his administration has made "some progress"
in the battle against rising price levels. "If President Biden is truly serious about fighting inflation, he needs to address the nation's growing housing affordability crisis,"
National Association of Home Builders Chairman Jerry Konter said earlier this month.