by Jennifer Sokolowsky, Puget Sound Business Journal

Home prices in Seattle fell again in October, the third straight month of declines, according to the S&P/Case-Schiller Home Price Indices. And those falling home prices and low interest rates may be luring more young, first-time homebuyers to buy rather than rent, leading to possible overbuilding in Seattle’s hot apartment-construction sector.

Seattle home prices fell 1 percent from September to October, slightly less than the 1.1 percent drop from August to September. The latest decreases are in line with S&P’s nationwide 20-City Composites, which fell by 1.2 percent. Nineteen of the 20 cities in the index saw home prices fall in October, with Phoenix the only city to show growth, at .3 percent.

Seattle home prices are down 6.2 percent from a year ago.

Demand from young Seattle renters may not be as strong as has been anticipated, as rock-bottom home prices could make owning cheaper than renting, according to the Seattle Times.

And that could lead to an over-supply of rental housing. In Ballard alone, for example, city planners this year have issued building permits for 748 apartment units.

A decrease in renter demand could pose problems for developers who are in the midst of a big Seattle apartment-building boom.

According to research firm Apartment Insights Washington, vacancies at larger complexes in King and Snohomish counties rose from 4.74 to 5.25 percent this fall, and rents fell slightly after six consecutive quarterly increases.

Tom Cain, president of Apartment Insights Washington, said that Ballard, the West Seattle Junction neighborhood, Queen Anne and the University District could become overbuilt if construction continues at its current pace.