The U.S. housing market took a turn in July.
A national measure of prices rose 15.8% year-over-year, the S&P CoreLogic Case-Shiller index showed Tuesday. That was the smallest gain since April 2021, and the slowdown from the 18.1% jump in June was the largest deceleration in the history of the index, according to Craig Lazzara, a managing director at S&P Dow Jones Indices.
While prices across the U.S. remain elevated compared to last year, there are signs that higher mortgage rates are cooling the pandemic buying frenzy. On a month-to-month basis, home prices in 20 U.S. cities slipped 0.4% in July, the first monthly decline since 2012.
“The cooling has come hard and fast,” Stephen Stanley, chief economist at Amherst Pierpoint, said in a note.
Mortgage rates have doubled this year, chilling the housing market, especially in West Coast cities where affordability was already strained.
Seattle-area home prices in July were still up compared to last year but have fallen since this spring. Single-family home prices were up 14.5% from last July and down 3% from June, according to the index.
In Seattle, that was the largest month-to-month drop since January 2009. But in 2008 and 2009, prices were also falling by double-digit percentages compared to the previous year. Today, prices are still up year over year.
San Francisco (-3.6%) and San Diego (-2%) also saw large month-over-month declines in July. Prices in New York were flat.
The Case-Shiller index includes portions of King, Snohomish and Pierce counties in its Seattle-area home price figures.
Even as the market cools, Seattle home prices are still far out of reach for many. The median King County home sold for $899,999 in August, according to separate data from the Northwest Multiple Listing Service.
The pandemic set off a real estate boom in the U.S. that was marked by bidding wars and soaring prices. But the market has cooled swiftly in recent months. Listings are lingering longer because demand has collapsed. And fewer houses are coming onto the market, with a recent report from Zillow showing that new listings slid almost 23% in August from a year earlier.
The result is that transactions are tumbling: Sales of previously owned homes fell for a seventh straight month in August, the National Association of Realtors reported last week, reaching the lowest level since the depths of the pandemic in May 2020.
“As the Federal Reserve continues to move interest rates upward, mortgage financing has become more expensive, a process that continues to this day,” Lazzara said in a statement. “Given the prospects for a more challenging macroeconomic environment, home prices may well continue to decelerate.”
Seattle Times staff reporter Heidi Groover contributed to this report.