Dropping Like It's Hot - Home prices fall the most since 2011 as demand declines.

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What's Happening Today

If you've been interested in buying a home and waiting patiently for prices to fall from their recent highs, we might have some good news for you. There are signs that the tide could be turning, with Zillow reporting that the typical home value fell 0.3% in August—the largest drop in a single month since 2011.

And that trend is likely to pick up speed, with nearly a quarter of builders surveyed by the National Association of Home Builders (NAHB) saying they've lowered prices this month, up from just under a fifth in August.

However, it's worth noting that those prices are still significantly above what they were just a year ago or before the pandemic, with the typical home value up 14.1% in August from a year ago, and up 43.8% from 2019, according to Zillow.

But while prospective homebuyers could see prices continue to drop, the same likely won't be true for mortgage rates. The Federal Reserve is widely expected to hike rates by another 75 basis points at its two-day meeting this week to counter rising inflation, which would raise mortgage rates.

- Kara

Editors' Picks

Here's Where the Housing Market Is Most Vulnerable (The Balance)

I'm Rich, But He's Not—How Do We Split Rent? (The Balance)

Some Investors Fear Fed Will Tighten Rates Too Far as Inflation Bites (Reuters)

How Does the Fed Funds Rate Work, and What Is Its Impact? (The Balance)

Next Up for US Unions: Major Contracts for 700,000 Workers (CNN)

Big Regional Banks Might Face New Rules for Dealing With a Crisis (Wall Street Journal)

Is a Bank or Credit Union Better? (The Balance)

Term of the Day

Home Equity Loan

A home equity loan is a lump-sum loan secured by the portion of your home that you've already paid off, also known as your home equity. These loans usually have equal monthly payments and may have varying durations and interest rates. This financing option often comes with attractive terms because it is considered a lower risk for banks than an unsecured personal loan.

Home equity loans are particularly popular when home values have risen, since they allow you to borrow against a higher value for your home than your initial mortgage balance, which often improves your loan-to-value (LTV) ratio. Many lenders prefer that your LTV ratio is 85% or less before you can qualify for a home equity loan, and many will only consider lending up to 80% of your current home equity.

Off the Charts

By whatever indication you pick, the housing market is slowing down. But just how much will prices fall, and where? One analysis by economists at Moody's Analytics found some metro areas and regions may see home prices crash soon.