Home prices cooled in January, with national home prices rising just 3.8% from a year earlier, down from a 5.6% gain in December, according to the NSA S&P CoreLogic Case-Shiller Nationwide Home Price Index.
Home prices have fallen for seven straight months, but the decline narrowed in January. This is likely to be due to a brief drop in mortgage rates and the resulting surge in sales.
The 10-city composite index rose 2.5 percent year-on-year, down from 4.4 percent in December. The 20-City Composite also rose 2.5 percent, down from 4.6 percent in the previous month.
House prices have been cooling due to higher mortgage rates. The average interest rate on the most popular 30-year fixed-term mortgage hit a dozen lows in the first two years of the epidemic, once below 2%, but then rose sharply. The rate has hovered in the high 6% range since last fall, even as it has fluctuated in recent weeks due to a number of bank failures and the resulting stress on the banking sector as a whole.
“That said, the Fed’s continued focus on lowering its inflation target means that rates are likely to remain high in the near term,” said Craig Lazzara, managing director of S&P Dow Jones Indices, in a news release. a weaker economy is likely to continue to be a drag on house prices in the coming months.”
Prices fell 7.6 percent in San Francisco, 5.1 percent in Seattle, 0.5 percent in Portland, Oregon and 1.4 percent in San Diego. Phoenix was flat.
Miami, Tampa and Atlanta once again recorded the largest annual home price increases among the top 20 metros. Home prices rose 13.8 percent in Miami, 10.5 percent in Tampa and 8.4 percent in Atlanta. However, all of the top 20 cities had lower home price volatility for the 12 months ending January 2023 compared to the year ending December 2022.
Homebuyers may see more casual sellers this spring, but there still aren’t enough homes for sale. Home lending may also tighten as the banking system comes under pressure.
Hannah Jones, economic data analyst at Realtor.com said, “More expensive and less borrowing, especially with an uncertain economic outlook, is likely to continue to limit buyer demand. Although home sales are expected to increase with seasonal trends is rebounding, but the pace of sales this spring is still expected to be slower than last year as uncertainty and high cost containment activity.”
