• The S&P CoreLogic Case-Shiller National Composite Index recorded a 10.6% gain in September from a year ago, down from 12.9% in the previous month.
• The S&P CoreLogic Case-Shiller 20-City home price index rose 10.4% in September from a year ago, down from 13.1% in the prior month.
• PNC forecasts a 7% year-over-year decline in house prices in 2023.

Annual house price appreciation in September, as measured by the S&P CoreLogic Case-Shiller National Composite Index decelerated to 10.6%, the slowest pace since December 2020, from 12.9% in August. The S&P CoreLogic Case-Shiller 20-City Index recorded a 10.4% gain in September versus September 2021, down from 13.1% in August. The national index declined 0.8% (after seasonal adjustments) in September from August, following a 0.9% decline in August. On a month-over-month basis, the 20-City index fell 1.2% in September, following a 1.3% decline in August. The sharpest monthly declines from the prior month were in Phoenix (2.1%), Las Vegas (2.1%), and San Francisco (2.2%).

House price growth decelerated on a year-over-year basis in all 20 cities tracked by the index. Ten of the 20 cities reported double-digit annual price increases in September, down from 14 in August. Miami (24.6%), Tampa (23.8%), and Charlotte (17.8%) reported the highest annual gains while Minneapolis (6.5%), Seattle (6.2%), and San Francisco (2.3%) reported the weakest annual gains.

The housing market slowdown continued in September as the sharp increase in mortgage rates since the start of the year weighed on housing demand. The 30-year fixed mortgage rate rose to 7.1% at the end of September but has declined in recent weeks thanks to better-than-expected inflation data.

The pandemic drove the housing boom as the need for social distancing increased and physical proximity to the workplace became less important. But with higher mortgage rates and deteriorating affordability, the housing market is in recession; single-family starts are down 30% this year, existing-home sales have fallen for nine straight months, and the NAHB index fell in November to the lowest level since June 2012 (excluding April 2020 at the beginning of the pandemic). Interest-rate-sensitive sectors will likely weaken further as the Fed continues its hiking cycle. PNC expects further slowing in housing activity through the rest of this year and in 2023, with house prices declining 7% year-over-year by the end of 2023.