The house-price decline accelerates

American home prices fell by 2.4% in just the two months from June to August. On the other hand, they're still up 4.8% in the past six months, 13.1% over the past year, and 42.2% since the pandemic hit.

Why it matters: Prices could fall a lot further yet.

Be smart: The irony of the current housing market is that even as the price of housing is starting to decline, the cost of housing is still hitting new highs.

• By the numbers: Someone buying a median-priced home in September rather than June would pay 5.1% less for their house ($427,000 rather than $450,000) but — assuming a 20% downpayment and a 30-year mortgage — would face monthly mortgage payments almost 10% higher, at $2,260 per month.
• Mortgage rates have continued to rise in October, mostly recently hitting a new high of 7.16%, per the Mortgage Bankers Association. That means housing will continue to become less affordable, even if there are further declines in prices.
• As interest rates rise, all-cash buyers similarly face a higher opportunity cost of sinking their money into a property. That $427,000, sitting in a money-market fund paying 3% interest, generates almost $13,000 per year — income that buyers are effectively giving up by buying.

Between the lines: San Francisco and Seattle led the decliners, in a sign that weakness in tech stocks is being felt in certain housing markets.

The big picture: Further declines in house prices can't come soon enough, as far as the Fed is concerned. Housing is one third of the Consumer Price Index.

The bottom line: A period of modestly declining house prices feels broadly desirable right now, even in this nation of homeowners.