According to CoreLogic's [1] Home Price Index [2] for January 2023, home prices gains across the country cooled to 5.5%, a number which has been trending downwards for the last nine month and is the lowest recorded since housing activity picked up after the onset of the pandemic.
This deceleration of prices was most noticeable in the Western states and large metropolitan areas which have seen substantial appreciation over the last three years.
Three Northwestern states (along with Washington, D.C.) posted at least slight annual declines as migration patterns that began during the pandemic shifted, slowing demand and driving price decreases.
However, on a national level, home prices have increased for 132-straight months. Corelogic has forecasted
“While 2023 kicked off on a more optimistic note for the U.S. housing market, recent mortgage rate volatility highlights how much uncertainty remains,” said Selma Hepp [3], Chief Economist at CoreLogic. “Nevertheless, the continued shortage of for-sale homes is likely to keep price declines modest, which are projected to top out at 3% peak to trough.”
“Home price depreciation and strong income growth are expected to boost affordability, which is particularly important for first-time buyers,” Hepp continued. “This group has accounted for a higher share of mortgage applications since last summer, as first-time buyers don’t need to surrender an extremely low mortgage rate like current homeowners.”
Top takeaways from the report as highlighted by CoreLogic include:
- U.S. home prices (including distressed sales) increased by 5.5% year over year in January 2023 compared to January 2022. On a month-over-month basis, home prices declined by 0.2% compared to December 2022.
- In January, the annual appreciation of attached properties (6.5%) was 1.3 percentage points higher than that of detached properties (5.2%).
- CoreLogic forecasts show annual U.S. home price gains slowing to 3.1% by January 2024.
- Miami posted the highest year-over-year home price increase of the country’s 20 largest metro areas in January, at 17.3%, while Tampa, Florida continued to rank second at 11.7%.
- Florida and Maine recorded the highest annual home price gains, 13.4% and 11.5%, respectively. South Carolina posted the third-highest gain, with a 10.7% year-over-year increase. Three states and one district registered year-over-year price declines: Idaho (-2.3%), Washington (-2.2%), Montana (-0.6%) and Washington, D.C. (-0.1%).