The S&P/Case-Shiller 20-city index rose a seasonally adjusted 0.4% in October but in a clear sign of the housing market’s recent struggles the increase in prices over the past 12 months slipped to the lowest level in two years.
The year-over-year advance in prices fell to 5% from a revised 5.2%.
The Econoday consensus was for a 0.4% monthly increase for the 20-city index and a 5% yearly increase.
What happened: Home prices are still rising faster than the incomes of prospective home buyers, but not nearly as fast as they were a few years ago. Sales and construction have also slowed.
How come? Higher interest rates are the chief reason. The rate on a 30-year fixed mortgage climbed to as high as 4.94% last month from less than 3.5% at the start of 2017.
Rates have fallen sharply in the past few weeks amid a stock-market selloff and growing worries about the economy, but they are still more than a full percentage higher compared to two years ago.
Big picture: The housing market is unlikely to regain momentum anytime soon despite some softening in mortgage rates.
What they’re saying: “The combination of higher mortgage rates and higher home prices rising faster than incomes and wages means fewer people can afford to buy a house,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.