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These are the 10 cities where house prices have fallen the most in recent months

The rises in interest rates in the United States are being strongly felt in the housing market. Home prices have fallen from summer highs in 10 US metropolitan areas, in part because fewer people can afford current home-loan interest rates.

The average interest rate on a 30-year fixed mortgage, for example, has more than doubled in just one year. It stood at 6.6% in the week of October 6 when in the same period last year it was at 2.9%. A hike like that raises monthly mortgage payments and puts some people off buying a home right now.

For now, it is a scenario that will persist as long as the Federal Reserve (Fed) —the US central bank— continues to raise its key interest rate to control inflation well above its usual levels. The head of the Fed, Jerome Powell, has recognized that this string of increases will impact households in the country, but he justifies it by arguing that the blow will be worse if they do not stop the rise in consumer prices.

The Fed’s maneuvers affect other interest rates to a greater or lesser degree. That’s why mortgage rates have risen so sharply in recent months. And that is impacting home prices in some US markets.

The specialized website Realtor.com analyzed the price listings of 100 metropolitan areas, specifically how much prices have varied since June, the month in which prices registered their highest levels. To ensure that its analysis included geographic diversity, Realtor.com explains that it only included the metro area in a single state where prices fell the most.

In which areas have prices dropped the most?

Some of them are places where more people moved during the pandemic. In the first place is Austin, Texas, one of the ‘favorite’ cities of those who migrated from the north in search of quieter places in the south. In Austin, the median listing price reviewed by Realtor.com in September was $558,275. That’s down 10.3% from June, though it’s still 2.2% higher than the same time last year.

That’s a picture that is replicated in the other nine areas in this Realtor.com listing: prices have dropped since June, but will remain above last year’s levels, when a kind of ‘war for houses’ broke out. in which a house was for sale for a short time or in which potential buyers offered more than what the sellers asked for in order to secure a house.

These are other nine metropolitan areas:

1. Phoenix, Arizona: Median price was $493,500 in September, down 9.9% from June but up 4.4% from last year

2. Palm Bay, Florida: Median price was $379,995 in September, down 8.9% from June, though up 5.8% from last year

3. Charleston, South Carolina: Median price was $500,000 in September, down 8.6% from June but up 10% from last year

4. Ogden, Utah: Median price was $532,500 in September, down 8.6% from June but up 7.7% from last year

5. Denver, Colorado: Median price was $625,000 in September, down 8% from June but up 4.2% from last year

6. Las Vegas, Nevada: Median price was $460,000 in September, down 7.9% from June but up 7% from last year

7. Stockton, California: Median price was $581,725 ​​in September, down 7.7% from June, though up 7.3% from last year

8. Durham, North Carolina: Median price was $460,000 in September, down 7.5% from June but up 2.2% from last year

9. Spokane, Washington: Median price was $449,900 in September, down 7.4% from June but up 5.6% from last year

Is a collapse in house prices anticipated?

On a macro level, the economic environment is uncertain amid high inflation, efforts to control it (not only in the United States, but also in other parts of the world), the problems that persist in supply chains due to the pandemic and the impact that the war in Ukraine has had on oil and gasoline prices.

Some analysts predict a recession in the United States in 2023, while organizations such as the International Monetary Fund (IMF) give gloomy estimates of the global economy.

The course that the US economy takes will most likely affect the housing market, in which Fed Chairman Powell estimates there will be a “correction”.

“There was a huge imbalance between supply and demand, and house prices were rising at an unsustainably fast level. So the slowdown we’re seeing in house prices should help bring prices back more in line with rents and other market fundamentals, and that’s good,” Powell told reporters in late September.

“In the long term we need supply and demand to be more aligned so that house prices go up to a reasonable level, at a reasonable pace, so that people can buy houses again. We will probably have to go through a correction in the real estate market to return to a scenario like that,” he added.

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