Home prices in San Diego fall sharply amid Fed inflation-fighting rate hikes

Rising interest rates continue to dampen house price appreciation in San Diego County, with values ​​down 2.5% from June to July, according to S&P Case-Shiller indices released Tuesday. .

The monthly decline is not surprising given the Federal Reserve’s aggressive interest rate hikes to curb inflation. The central bank authorized a rate hike of 75 basis points for the third consecutive time at the start of the month. Interest rates should continue to rise, at least in the short term.

This story is for subscribers

We offer subscribers exclusive access to our best journalism.
Thank you for your support.

“Spiking mortgage rates have driven the housing market into a corner,” Selma Hepp, deputy chief economist at CoreLogic, said in a research report. “Many buyers moved away as the cost of home ownership became prohibitive, while sellers were unwilling to let go of locked-in, record interest rates and sale price expectations. maximum.”

On Tuesday, the national average for a 30-year fixed-rate mortgage was 6.75%, according to Bankrate. That’s more than double the interest rate this time last year.

Nationwide, home prices fell 0.3% from June to July, according to Case-Shiller.

San Francisco recorded the largest monthly decline, with home values ​​falling 3.5%. Seattle prices fell 3.1%, followed by San Diego at 2.5%.

While San Diego’s monthly prices have fallen, home values ​​are still 16.6% higher than they were in July 2021, according to the Case-Shiller index.

But that appreciation is well below the breakneck pace of increases seen in San Diego over the past two years, when annual prices jumped 30%.

Today, cities in Florida and the South are leading the way in annual home price increases.

Tampa had the fastest annual appreciation at 31.8%, followed closely by Miami at 31.7%, according to Case Shiller. Dallas was up 24.7%. Charlotte, Atlanta, Las Vegas and Phoenix all exceed 20%.

Home prices in the San Diego area peaked in April 2022, according to Case-Shiller data. Since then, they were relatively flat – until July’s sharp drop.

“Although U.S. home prices remain well above their levels of a year ago, the July report reflects a sharp deceleration,” said Craig Lazzara, managing director of S&P Dow Jones Indices.

“As the Federal Reserve continues to push interest rates higher, mortgage financing has become more expensive, a process that continues to this day,” Lazzara continued. “Given the outlook for a tougher macroeconomic environment, house prices may well continue to slow.”

The highly regarded S&P Case-Shiller Housing Index ranks 20 cities to create a national snapshot of the country’s housing markets. The index typically lags real-time data by about two months and uses a three-month moving average to determine price trends.

The Case-Shiller data mirrors other reports on housing market trends. CoreLogic/DQNews reported earlier this month that San Diego County’s median home price fell in August for a third consecutive month to $799,000.

That’s down from a record high of $850,000 in May, according to data from CoreLogic/DQNews. The median means that half of the houses sell for less and half sell for more. The data includes the resale of single-family and new homes, as well as townhouses and condominiums.

“As the rebalancing of the housing market continues, sales of existing homes have fallen every month in 2022, hitting two-year lows in August,” said Zillow economist Nicole Bachaud. “The slowdown in home sales gives the market a chance to catch up and find a new equilibrium.”

Comments are closed.