Do you want to buy a house? If so, you've probably been waiting for home prices to "bottom out"—to fall to their lowest point before rising again. Well, I have good news for you: It looks like home prices have peaked and are steadily making their way back toward Earth.
According to today's Case-Shiller Home Price Index, September's home prices were up 10.6% compared to last year. And while that's still high, it's a drop from August, when home prices were 12.9% higher year-on-year.
Despite the overall price growth deceleration, if you're waiting for home prices to fall to the same levels as before the pandemic, you might be waiting a while (and perhaps, even forever).
Mortgage rates have been throwing cold water on the real estate market, causing prospective home buyers to wait on a purchase. The current interest rate on a 30-year loan sits at 6.58%, a drop from 7.08% just two weeks ago. But rates are still well above the 3.22% you could have gotten if you bought a home in January.
So what does this mean if you want to buy a house? There may be light at the end of the tunnel—at least when it comes to home prices. And depending on how high the Federal Reserve hikes rates at its next policy meeting, we could see higher mortgage rates which could send home prices even lower. If you can afford to wait, it could mean big savings.
Decelerating home prices might make you want to buy, but it is happening at a time when consumers aren't feeling too great about their finances or the economy. The Consumer Confidence Index declined again last month to a score of 100.2, dropping two points since October. Short-term outlooks on the economy also declined, as gas prices rose and the threat of an upcoming recession still looms.
-Kristin
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