Home sales prices continue to surge, rising 19.5% annually in September, according to the latest S&P CoreLogic Case-Shiller Index report. But despite this increase, some experts say home price growth is beginning to slow.
"If I had to choose only one word to describe September 2021’s housing price data, the word would be ‘deceleration,’ said Craig Lazzara, S&P Dow Jones Indices managing director. "Housing prices continued to show remarkable strength in September, though the pace of price increases declined slightly."
George Ratiu, Realtor.com's manager of economic research, added that the slowdown was aided by fewer homebuyers searching for new homes. He said that competition among buyers lessened, and mortgage rates rose.
"The other factor contributing to the slowing price growth was the jump in mortgage rates, with Freddie Mac’s 30-year fixed loan moving from 2.87% at the start of September to 3.01% by the end of the month, curbing buyers’ ability to bid up prices," Ratiu said.
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Some cities see home prices increase more than 30%
Home prices dropped slightly from the 19.8% annual gain in August, the Case-Shiller report indicated. The 10-City Composite, which measures prices in the top 10 U.S. cities, rose by 17.8% and the 20-City Composite grew by 19.1% annually.
"We also saw very strong price growth at the city level," Lazzara said. "All 20 cities saw price increases in September, and all 20 cities stand at their all-time highs. September’s price increase ranked in the top quintile of historical experience for all 20 cities, and in the top decile for 17 of them. That said, in 14 of 20 cities, prices decelerated – i.e., increased by less in September than in August."
Home prices surged a full 33.1% in Phoenix, leading other cities in home-price growth for the 28th consecutive month. Tampa saw the second-highest rate of increase at 27.7%, followed by Miami at 25.2%, coming in slightly higher than Dallas, San Diego and Las Vegas.
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What does home price growth look like for 2022?
Despite a "typical seasonal slowdown," home price growth should return to a balanced level between buyers and sellers, according to CoreLogic Deputy Chief Economist Selma Hepp. She added that buyer demand is still strong, and that purchases are above pre-COVID pandemic levels "resulting in another month of close to 20% annual gains in home prices."
"There is still low availability of for-sale homes, which continues to drive price growth," she said. "But the competition has faded and assuaged some of the bidding war intensity. Overall, home price growth is likely to continue slowing over the next year."
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