Home prices cooled in January, with national home prices rising just 3.8% from a year earlier, down from a 5.6% rise in December, according to the S&P CoreLogic Case-Shiller NSA Index of Nationwide Home Prices.
Home prices have fallen for seven straight months, but the decline narrowed in January. This is likely due to a brief drop in mortgage rates and the resulting surge in sales.
The 10-city composite index rose 2.5 percent year-over-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.
Home 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 record 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 amid several bank failures and the resulting strain on the banking sector as a whole.
Standard & Poor’sDow Jones“Having said that, the Fed’s continued focus on lowering its inflation target means rates are likely to remain elevated in the near term,” said Craig Lazzara, general manager of Indexes, in a press release. The outlook for mortgage financing and a weaker economy will likely remain a headwind for home 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.
Once again, Miami, Tampa and Atlanta 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 20 largest cities had lower home price volatility for the 12 months ending January 2023 compared with the year ending December 2022.
Homebuyers may see more casual sellers this spring, but there are still too few homes available for sale. Home lending may also tighten as the banking system comes under pressure.
Realtor.com economic data analyst Jones (Hannah Jones) said, “More expensive and less borrowing, especially in the context of an uncertain economic outlook, may continue to limit buyer demand. Although home sales are expected to increase with the Seasonal trends are rebounding, but the pace of sales this spring is still expected to be slower than last year as uncertainty and high costs limit activity.”