House prices continue to fall in the US

The US housing market continued to fall in October as the impact of higher mortgage rates and concerns about the economy rattled the market. The fall in house prices has reached its fourth month.

Prices fell 0.5 percent in October compared with the previous month, according to the S&P CoreLogic Case-Shiller Index. The index, which references seasonally adjusted home prices in 20 major cities, declined for the fourth straight month.

On the other hand, prices are still higher than a year ago, although they have dropped monthly. The annual increase in house prices across the country was 10.7 percent in September and 9.2 percent in October.

WHY ARE THE PRICES GOING DOWN?

The market began to decline earlier this year when the US Federal Reserve began raising the benchmark interest rate to alleviate high inflation in the country. Although the increase in interest rates raised the cost of those who want to access the loan, this situation caused the demand for housing to slow down and prices to fall.

Fixed 30-year mortgage rates hit a high of 7.08 percent in October, according to data from the Freddie Mac Federal Home Mortgage Loan Company. Thus, borrowing costs for those who want to borrow doubled compared to with the levels of the beginning of the year. On the other hand, household savings also eroded due to inflation. Although the demand for housing in the country has decreased, prices have also fallen.

WILL IT KEEP FALLING?

“As the Fed continues to raise interest rates, mortgage financing continues to be a drag on home prices,” Craig Lazzara, a director at S&P Dow Jones Indices, said in a statement. “Given the outlook for a challenging macroeconomic environment, prices may continue to weaken,” he said.