Home prices in 20 U.S. cities slowed in October for a seventh consecutive month, extending the longest streak since 2014, a sign of waning demand amid higher mortgage rates and elevated property values.
The 20-city index of property values increased 5% from a year earlier, after rising 5.2% in the prior month, S&P CoreLogic Case-Shiller data showed Wednesday. The median estimate in a Bloomberg survey of economists called for a gain of 4.9%. Nationally, home prices climbed 5.5% from October 2017.
The data showing the slowest pace of price gains in two years are the latest signs housing is in a broad slowdown, with sales and building also showing recent signs of weakness. The seasonally adjusted 20-city index gained 0.4% from the prior month, versus a 0.3% estimate.
Economists watch the year-on-year gauge to better track trends, which show home-price have been outpacing wages. Price gains taking a breather would be especially attractive for younger buyers or those purchasing a house for the first time; however, softer price gains also mean smaller advances in homeowner equity for others.
“The combination of higher mortgage rates and higher home prices rising faster than incomes and wages means fewer people can afford to buy a house,” David Blitzer, chairman of the S&P index committee, said in a statement. “Reduced affordability is slowing sales of both new and existing single family homes. Sales peaked in November 2017 and have drifted down since then.”
All 20 cities in the index showed year-over-year gains, led by a 12.8% increase in Las Vegas and almost 8% increases in both San Francisco and Phoenix. The weakest gains were in Washington, which rose 2.9% on year, Chicago, which climbed 3.3%, and New York, up 3.1%.