U.S. home-price gains keep slowing as higher ratesscare off buyers, Case-Shiller shows
Getty ImagesHome prices aren't rising as fast as they were two years ago, but that's not bringing more buyers into the market.
The numbers: 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.
Tuesday's Case-Shiller report covers the three-month period ending in October.
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.
Construction firms can't find enough skilled workers to do all the work they are already doing and market turmoil could make home buyers already anxious about higher rates less willing to take the plunge.
Nine cities saw prices increases in October versus September.
| Metro area | Monthly change | 12-month change |
| Atlanta | 0.2% | 6.0% |
| Boston | 0.1% | 5.4% |
| Charlotte | 0.3% | 5.0% |
| Chicago | -0.3% | 3.3% |
| Cleveland | -0.5% | 4.8% |
| Dallas | 0.0% | 3.9% |
| Denver | -0.3% | 6.9% |
| Detroit | 0.0% | 6.0% |
| Las Vegas | 0.3% | 12.8% |
| Los Angeles | 0.1% | 5.5% |
| Miami | 0.1% | 4.8% |
| Minneapolis | -0.1% | 5.9% |
| New York | 0.4% | 3.1% |
| Phoenix | 0.7% | 7.7% |
| Portland | -0.6% | 4.9% |
| San Diego | -0.1% | 3.8% |
| San Francisco | -0.7% | 7.9% |
| Seattle | -1.1% | 7.3% |
| Tampa | 0.3% | 6.4% |
| Washington | 0.0% | 2.9% |
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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.
Also read: This chart shows fizzling momentum in the housing market
Market reaction: The U.S. 10-year Treasury note TMUBMUSD10Y, +2.14% , which sets the tone for mortgage rates, stood at 2.74%. Just a few months ago it hit a seven-year high of almost 3.25% before tumbling. The Dow Jones Industrial Average DJIA, +4.98% rose in Wednesday trades, but it's down some 5,000 points from its record high.