Home price increases slowed in July for the third consecutive month, evidence that rising mortgage rates are starting to slow activity in the housing market.
Prices climbed 15.8% nationally in July from the previous year, a marked drop from the revised gain of 18.7% recorded in June, the S&P CoreLogic Case-Shiller index showed on Tuesday.
"July’s report reflects a forceful deceleration," Craig Lazzara, a managing director at S&P Dow Jones Indices, said in a statement. "The -2.3% difference between those two monthly rates of gain is the largest deceleration in the history of the index."
The 10-City composite, meanwhile, climbed 14.9% annually, down from 17.4% in June, and the 20-City composite rose 16.1%, down from 18.7% the previous month.
Home prices increased the most in Tampa, Florida, with a 31.8% gain. Miami followed with an increase of 31.7%. Dallas, Texas was third at 24.7%.
The Case-Shiller index reports with a two-month delay, meaning it may not capture the latest slowdown in the market.
Even with higher interest rates putting homeownership out of reach for millions of Americans, prices are still steeper than just one year ago.
A separate report from the National Association of Realtors last week showed that the national median home price moderated slightly in August, falling from a record high of $413,800 recorded in June to $389,500. That is still up 7.7% from the same time one year ago.
The interest rate-sensitive housing market has started to cool noticeably in recent months as the Federal Reserve moves to tighten monetary policy at the fastest pace in three decades. Policymakers already lifted the benchmark federal funds rate five consecutive times — including three back-to-back 75-basis-point increases — and have shown no signs of slowing down.
The average rate for a 30-year fixed mortgage climbed to 6.29% for the week ending Sept. 22, according to recent data from mortgage lender Freddie Mac. That is significantly higher than just one year ago when rates stood at 2.88%.
Combined with high home prices, the rapid rise in borrowing costs has pushed many entry-level homebuyers out of the market.
A new report from Redfin on Monday showed home sale cancellations jumped in August from the previous year as buyers retreated from the market.
About 64,000 home purchase agreements were called off in August, equal to 15.2% of homes that went into contract that month.