The housing bubble has been popped.
The Case-Shiller Home Price Index posted its biggest monthly drop in about a decade, sliding 0.8% in July.
Moreover, the Federal Housing Finance Agency’s (FHFA) house price index also slipped 0.6% in July.
“Although U.S. housing prices remain substantially above their year-ago levels, July’s report reflects a forceful deceleration,” says Craig J. Lazzara, Managing Director at S&P DJI.
“For example, while the National Composite Index rose by 15.8% in the 12 months ended July 2022, its year-over-year price rise in June was 18.1%. The -2.3% difference between those two monthly rates of gain is the largest deceleration in the history of the index. We saw similar patterns in our 10-City Composite (up 14.9% in July vs. 17.4% in June) and our 20-City Composite (up 16.1% in July vs. 18.7% in June). On a month-over-month basis, all three composites declined in July.”
The housing recession is here and with mortgage rates at around 6.25% — and more room for growth — the real estate market is going to collapse.
Will it be like the 2006-2008 debacle? Not necessarily because subprime does not account for a larger share of the market and delinquency rates — for now — are not at crisis levels.
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