Home prices drop for third straight month as U.S. market cools

The U.S. housing market pulled back even more in September, with prices slipping 1.2% from a month earlier.

It was the third straight decline for the seasonally adjusted measure of prices in 20 large US cities, according to the S&P CoreLogic Case-Shiller index.

The housing market suddenly started to cool this year, driven in part by higher borrowing costs as the Federal Reserve hiked its benchmark rate to tamp down inflation. The more-than-doubling of mortgage rates this year has sidelined potential buyers and slowed demand, leading sellers to list fewer properties.

“As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be more expensive and housing becomes less affordable,” Craig Lazzara, a managing director at S&P Dow Jones Indices, said in a statement Tuesday. “Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to weaken.”

Although prices are rising year-over-year, they are slowing fast. A nationwide gauge increased 10.6% in September from a year earlier, down from a nearly 13% gain in August.

Of the 20 large U.S. cities, Miami and Tampa, Florida, as well as Charlotte, North Carolina, posted the biggest annual price increases through September. San Francisco and Seattle had the weakest gains.