Is America’s real estate facing a crisis because of high interest? (Getty)
Continue real estate market In 20 of the largest American cities, it decreased during the month of October, so that real estate prices decreased by 1.2% from the prices of the previous month, and that the ending month was the third in a row of declines, according to the “S&P Core Logic” index.
The housing market abruptly calmed down before the middle of the year, driven on the one hand by rising borrowing costs, with successive raise interest From the Fed, hoping to curb the rally Inflation rateOn the other hand, after the record highs witnessed by prices in the most important market in America, during the past two years.
The interest rate applied to mortgage loans has more than doubled its level at the beginning of the year, recording an average of more than 7% for most of the second half of the year.
Starting in March, the Fed raised the interest rate on its funds in six consecutive meetings, bringing it to the range of 3.75%-4%, after it was close to zero at the beginning of the year.
And with the successive hike, buyers of ten-year US Treasury bonds, which represent the most important factor in determining the interest applied to mortgages, asked for interest rates higher than 4.25%, although they were content at the beginning of the year with a return not exceeding 1.5%.
With this rise, the interest rates applied to all instruments, including mortgages, increased, which sidelined potential buyers and slowed demand, forcing sellers to list fewer properties.
In a statement issued today, Tuesday, Craig Lazzara, Managing Director of S&P Dow Jones Indices, said, “Given the growing expectations of more macroeconomic challenges, home prices may continue to decline.”
Despite the increase in real estate prices on an annual basis, the data released showed a slowdown in the rate of increase compared to last year.
The real estate price index at the national level showed an increase of 10.6% in September compared to the same month last year, after the similar rise in the previous month was close to 13%, according to Bloomberg.
Of the 20 US cities whose prices the index investigated, Miami and Tampa, Florida, as well as Charlotte, North Carolina, recorded the largest annual price increase through September, while San Francisco, California, and Seattle, Washington, made the weakest gains.