Falling home prices are raising the risk of a deeper correction as the housing market cracks under high mortgage rates

• Latest housing market indicators Show permanent weakness in home prices, including consecutive monthly decreases. This remained warm between the high mortgage rates that still continued around 7%, while the housing supply increased. According to Capital Economics, the decline in prices increases the risk of a long regression.

The housing market has been largely frozen since the mortgage rates have increased a few years ago, but the latest indicators pointed out that a decrease in prices has been expanded.

The latest case Shiller Home Price Report decreased by 0.3% monthly in the 20 city index in April, and more upright than March’s revised 0.2% dive.

In a note on Tuesday, North American economist in Capital Economics, Thomas Ryan, warned that one consecutive decreases may indicate the next “a deeper correction”.

“After falling in March, in April, a decrease in 0.3 m/m in housing prices, the market finally fell under the weight of close to 7% mortgage rates, increasing the risk of continuous decline,” he added.

Ryan, three -month annual housing prices decreased by 0.4%, he said. And while prices rise compared to last year, the slowest speed since August 2023

Since the FHFA price index decreases by 0.4% monthly, the case shiller data is not the only red flag.

Ryan, “Obviously, the current Homes market, while selling more people homes, while forcing sellers to adjust the price expectations, the current houses market loses acceleration,” he said.

Previous data are also compatible with a downward trend. The average selling price of an existing house fell from a sequel to seasonality. This is the number of houses offered for sale to pandemic levels.

To be sure, lower prices make the houses more attractive, potentially demand and more demand. Represent some relaxation For young Americans who want to buy but priced from the market.

However, the economists in Citi Research marked the ongoing head winds, attributed to high price decreases to high mortgage rates, high uncertainty, to a weakening labor market that softened and weakened consumer demand.

In addition, he said that the slowdown in the housing sector is an early sign that the underlying demand in the housing sector is weakened this year.

“Although prices can still fluctuate from month to month, the median sales prices consistently softening, the trend, such as the case Shiller Index, such as new housing prices will continue in more stable measurements,” he said.