After a massive surge in home prices, which started early in the COVID-19 pandemic, high mortgage rates have slowed and, in some cases, reversed that advance. A recent study shows that Las Vegas has home prices that have started to slip the most among America’s large cities.
Once a month, the S&P Case-Shiller home price index is released. The most recent edition covers the month of October. Nationwide, home prices dropped by 0.5% month over month. A negative move of this magnitude has rarely been posted in over two years. Year over year, prices continue to rise, up 9.2%, which is a slowdown compared to recent months. The number was closer to 20% earlier this year.
Craig J. Lazzara, managing director at S&P DJI, commented, “October 2022 marked the fourth consecutive month of declining home prices in the U.S.” While Americans are not as mobile as they were early in the pandemic period, the primary culprit is mortgage rates, which were 3% for a 30-year fixed interest loan a year ago and have risen closer to 6% recently. This makes homes that were affordable for people with adequate incomes to make purchases not affordable at all.
Las Vegas has been among America’s fastest-growing cities for decades. Home prices were shattered during the Great Recession, as prices collapsed and defaults and foreclosures surged. The city has made an impressive comeback since then. This was interrupted when the gaming industry was closed down due to the COVID-19 pandemic. But it rebounded once those businesses reopened.
From September to October, home prices in Las Vegas fell 1.8%. The city with the next largest drop was San Francisco, at 1.7%. No cities posted price increases month over month. The city that did the best was New York, which fell only 0.2%.
It is too early to say if Las Vegas is the canary in the coal mine. If so, the downward reset in home prices will be the worst in over a decade.
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