US House Prices See Slowdown as Mortgage Rates Climb
Annual growth halves to 0.8% in September, mirroring rising interest rates and economic uncertainty.
Home price appreciation in the United States slowed significantly in September, with annual growth halving from 1.6% in August to 0.8%, according to data released by Nationwide Building Society. This marks the weakest rate of annual growth recorded since December 2025, with the typical home now valued at approximately $274,251.
On a monthly basis, the average home price decreased by 0.2%, contributing to a total decline of $4,639 since April. Robert Gardner, chief economist at Nationwide, attributed the subdued market conditions to an "uncertain economic backdrop." He cited ongoing geopolitical tensions, which are placing upward pressure on energy prices and fueling inflation concerns. This, in turn, has led financial markets to anticipate potential increases in the bank rate, consequently driving up mortgage interest rates.
While prices in northern regions of England have seen growth over the past year, with the North West and North East experiencing 3.9% increases respectively, southern areas have experienced stagnation or decline. Home values in London's commuter belt have dropped by 0.4% over the last 12 months. East Anglia and the East Midlands have seen prices decrease by 0.7% and 0.5% respectively year-on-year, while the South West recorded a 0.3% decline.
Jonathan Hopper, chief executive of buying agent Garrington Property Finders, noted that the supply of homes for sale now exceeds the number of serious buyers, applying downward pressure on prices across more regions than just the South East. He added that higher property values in southern areas mean buyers often require larger mortgages. The recent rise in interest rates has reduced affordability for these buyers, giving those in the market a stronger negotiating position.
Mortgage rates have seen a notable increase, with several lenders, including Nationwide Building Society, Virgin Money, and TSB, raising their rates this week. Deals with rates below 5% have become scarce, and most borrowers are now facing rates between 5% and 5.5%. This is a significant shift from earlier in the year when most borrowers could secure rates below 4%, with some two-year fixes dipping as low as 3.5%.
Net mortgage approvals for house purchases, a key indicator for future borrowing activity, fell to 54,900 in August from 55,900 in July, according to the Bank of England. This figure is also below the average of approximately 60,100 observed over the preceding six months.