Home Price Appreciation Losing Steam
CoreLogic, Irvine, Calif., said year-over-year home price growth slowed for the fourth consecutive month, with more metro areas likely to see further decreases in the coming months.
The company’s monthly Home Price Index and HPI Forecast for August noted although U.S. home prices continued their 127-month run of consecutive annual gains in August, they slowed for the fourth straight month to 13.5%. That’s the lowest year-over-year appreciation recorded since April 2021.
On Monday, Black Knight, Jacksonville, Fla., reported similar findings. Its monthly Home Price Index reported median home prices fell by 0.98% in August, only marginally better than July’s upwardly revised 1.05% monthly decline. It said July and August mark the largest single-month price declines seen since January 2009 and rank among the eight largest on record.
Selma Hepp, interim lead of the Office of the Chief Economist with CoreLogic, said the August results partially reflect continued cooling buyer demand due to higher mortgage rates and housing trends motivated by the COVID-19 outbreak winding down. The 0.7% month-over-month price decrease also indicates reduced homebuyer enthusiasm, with nearly three-quarters of states posting declines from July.
“The increased cost of homeownership has dampened buyer demand and caused prices to decelerate at a faster pace than initially expected,” Hepp said. “Housing markets on the West Coast and in the Mountain West, as well as second-home markets, recorded particularly strong price growth in the summer of 2021 but were the first to see month-over-month price declines during the same period this year. While decelerating price growth and price declines benefit younger potential homebuyers, mortgage rates that are approaching 7% may cut many hopefuls out of the picture.”
Other report findings:
–Annual appreciation of detached properties (13.7%) was 0.9 percentage points higher than that of attached properties (12.8%).
–Annual U.S. home price gains are forecast to slow to 3.2% by August 2023.
–Miami posted the highest year-over-year home price increase of the country’s 20 largest metro areas in August, at 27.1%, while Tampa, Fla. dropped to the second spot at 26.9%. Hepp said Hurricane Ian’s impact on Tampa’s housing market and other parts of Florida could cause price growth there to relax even more than the projected U.S. slowdown.
–Florida and Tennessee posted the highest home price gains, 26.4% and 20% respectively. North Carolina ranked third with a 19.9% year-over-year increase. Washington, D.C. ranked last for appreciation at 2.4%.