A sign is posted in front of a home for sale on December 19, 2022 in Los Angeles, California.
Mario Tama Getty Images
Home prices fell in the depths of winter, as higher mortgage rates pushed more buyers to the brink.
Prices in November were still 8.6% higher than in the same month in 2021, but this was the first annual reading in the single digits in 21 months, according to CoreLogic. This is the lowest rate of appreciation since November 2020.
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Prices are currently 2.5% below the spring 2022 peak and are expected to continue to decline this year. CoreLogic’s forecast has prices moving down into negative territory in the spring before rebounding by about 2% to 3% in the fall.
“Although house price growth has slowed down significantly and will continue to do so in 2023, the strong gains in the first half of last year indicate that the total appreciation of 2022 will only be lower than that recorded in 2021,” said Selma Hepp, deputy chief economist. in CoreLogic. “However, 2023 will present its own challenges, as consumers remain wary of the housing market and the overall economic outlook.”
Mortgage rates rose again after a brief reprieve in November and early December. Rates have more than doubled over the summer, with the average rate on the popular 30-year fixed loan exceeding 7%. It reached a high of 7.37% at the end of October, according to Mortgage News Daily. In November and December it fell again, reaching a low of 6.13% in mid-December, but now back up to over 6.5%.
“Potential homebuyers are grappling with the idea of buying amid the possibility of further price declines and a persistent shortage of inventory. However, with slowly increasing affordability and a more optimistic economic outlook than previously thought, the housing market may show sustainability in 2023,” added Hepp.
Florida, South Carolina and Georgia saw the nation’s highest home price gains, as buyers continue to flock to the Sun Belt. Washington, DC, ranked last, with prices only 1.2% per year.
