San Diego region home prices fell in July for the second month in a row amid rising interest rates and a possible recession ahead, according to the authoritative Case-Shiller Index.
Prices in the region fell by 2.5% from June to July following a 0.7% dip from May to June.
Only San Francisco and Seattle recorded bigger drops, at 3.5% and 3.1% respectively, but the average decline across the 20 largest metropolitan areas was 0.8%.
“Although U.S. housing prices remain substantially above their year-ago levels, July’s report reflects a forceful deceleration,” said Craig J. Lazzara, managing director at S&P Dow Jones Indices.
Lazzara said that with mortgage rates rising and a possible recession ahead, home prices “decelerated across the United States” and could continue to trend down.
“Given the prospects for a more challenging macroeconomic environment, home prices may well continue to decelerate,” he said.
Zillow Senior Economist Nicole Bachaud said there is a “rebalancing of power in the housing market” that favors affluent buyers.
“A dip in demand from buyers being priced out of the market as mortgage rates soar is causing homes to stay on the market longer and home price growth to moderate,” she said. “Many would-be sellers are locked into low rates that make a move up to a much costlier mortgage a difficult transition, keeping inventory low.”
“This rebalancing is putting more power in the hands of some affluent buyers who can afford to stay active in the for-sale market, with more time to make crucial decisions, less competition, and more negotiating power than at any time in the past several years.”