Prices of single-family homes across the nation rose in October at the slowest rate in almost a decade, a housing index released Tuesday by Standard & Poor’s showed, giving more evidence of the housing market’s deceleration, which has affected many parts of the broader economy.
The S&P/Case-Shiller composite index showed a 2.4 percent year-over-year increase in the price of a single-family home based on prices of existing homes tracked over time in 10 metropolitan markets. For its 20-city composite index, prices grew 2.9 percent, the slowest rate ever for that data, according to the S&P index committee chairman, David Blitzer.
“Home price gains are continuing their steep deceleration,” said Chief Economist Robert Shiller of MacroMarkets LLC. “We can clearly see that the monthly price declines are wide spread nationally.”
The growth rate of the 10-city composite index is sharply below the 3.7 percent rise posted in September and the slowest since a 2 percent growth rate in February 1997, according to S&P.
In addition to the overall composite index, the housing indicator also measures the health of existing home sales in 20 major markets in the U.S. The S&P added 10 additional markets this month.
Among the worst performing markets were Detroit, Boston, Cleveland, San Diego and San Francisco. Seattle and Portland, meanwhile, posted strong annual returns.
Analysts predict continued slowing of sales amid a bloated inventory of homes.
The data is consistent with a report from the National Association of Realtors, which showed a tiny increase in sales of existing homes in October as the median home price fell by a record amount.
The realtors association showed that the median sale price dropped to $221,000 in October, a decline of 3.5 percent from a year ago. That was the biggest year-over-year price decline on record.
Meanwhile, the inventory of unsold homes in October reached the second-highest level ever recorded. At the pace homes were being sold in October, it would take 7.4 months to sell the currently available homes.
The Federal Reserve has been closely watching the housing market as it tries to slow the economy’s growth without pushing it into a recession. The Fed has left rates unchanged for the past four meetings, after raising rates 17 straight times since 2004.
At its last meeting on Dec. 12, a statement from the Fed said, “Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market.”
In recent quarters, economists had said the housing slump was creating a drag on the economy and pulling down gross domestic product growth. U.S. GDP fell to 2 percent in the third quarter amid a cooling real estate market.