US home prices are falling at the fastest rate since the Great Financial Crisis, says Black Knight

According to data from Black Knight, home prices fell in August for the second month in a row.

The decline in median rices in August was slightly less than in July. The price declines in July and August are the largest on record.

Black Knight president Ben Graboske said the only months with higher single-month price declines were in the winter of 2008 after the Lehman Brothers bankruptcy.

The housing market is hard hit by rising mortgage rates that are making buyers hesitant to purchase.

The Federal Reserve is trying to tame inflation and has caused mortgage rates to go up. During the height of the Covid-19 epidemic, the housing market took off, but it has cooled quickly.

"Historically low inventory, along with record low interest rates, was one of the key drivers behind US home prices seeing essentially a decade's worth of appreciation in just two and a half years," Graboske said.

Current sellers have a growing disincentive to give up their historically low-rate mortgage in this environment. If demand and prices come back in the spring, some may be waiting out the market.

Buying a new home is out of reach for many as the payment-to-income ratio continues to climb. Black Knight reported that the payment-to-income ratio hit a new high in June.

84 of the 100 largest US markets are now at more than three-decade lows in terms of home affordability.