Say goodbye to the housing bull run. U.S. home prices — for the first time in a decade — are falling.
A national measure of prices in 20 large cities fell 0.44% in July, the first drop since March 2012, the S&P CoreLogic Case-Shiller index showed Tuesday. The last real estate crash ended in 2012, ushering in 10 years of price gains, capped off by the two-year pandemic buying frenzy.
But the Federal Reserve has put a swift end to the party as it fights to curb inflation. Mortgage rates this year doubled, pricing out many buyers and causing sales to plunge. Now values are heading south.
The biggest month-over-month declines in July were in San Francisco (-3.6%), Seattle (-2.5%) and San Diego (-2%).
"The cooling has come hard and fast," Stephen Stanley, chief economist at Amherst Pierpoint, said in a note.
To be sure, prices remain high.
The Case-Shiller national index jumped 15.8% year-over-year in July. But 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.
There are also signs that there is plenty of pent-up demand for housing. US sales of new homes surged unexpectedly in August, government data showed Tuesday.
It was the strongest pace of new-home sales since March, perhaps reflecting a race by buyers to beat further increases in borrowing costs and take advantage of price cuts by some builders.
