Home prices fell for the sixth straight month in December as high mortgage rates dampened buyer demand, according to data released Tuesday.
New S&P CoreLogic Case-Shiller index data released Tuesday showed prices falling nationally by 0.3 percent in December from the previous month after seasonal adjustments. But prices were still higher than at the same time a year earlier, resulting in a nonseasonally adjusted increase of 5.8 percent.
“Home prices fell again in December, but levels are still higher than a year ago. Buyers and sellers ended the year on a discouraging note, with sales declining as mortgage rates soared, new listings sputtered out and active inventory pooled up as homes stayed on the market longer,” Zillow Senior Economist Nicole Bachaud said in a statement.
Mortgage rates have cooled since their high mark last fall, yet they are moving up again with data showing the 30-year fixed rate reaching 6.5 percent last week.
Bachaud added that the lower rates increased buyer demand “enough to possibly slow the cool down in prices in the beginning of the year.”
“But as rates are right back up in February, it’s likely that any momentum in this market will be short lived and affordability challenges will remain key to the direction and speed the market moves in the coming months,” she said.
And S&P DJI Managing Director Craig J. Lazzara said in a statement that ongoing economic challenges could further impact mortgage rates and continue to hamper demand and weaken prices.
“The prospect of stable, or higher, interest rates means that mortgage financing remains a headwind for home prices, while economic weakness, including the possibility of a recession, may also constrain potential buyers,” Lazzara said.
“Given these prospects for a challenging macroeconomic environment, home prices may well continue to weaken,” he added.