U.S. home prices increased 10.1% year over year, down from the 20.1% growth in April, according to CoreLogic’s Home Price Index for October. On a month-over-month basis, home prices declined by 0.1% compared to last month
According to the report, several factors are contributing to slowing appreciation: low inventory due to seller preferences to keep affordable mortgage rates that they have already locked in, homebuyer loss of purchase power and current economic uncertainty. Annual price growth is expected to taper off in the coming months, perhaps moving into negative territory by spring 2023, but then slowly ticking back into single digits as the year progresses.
- Annual appreciation of detached properties (10.1%) was 0.3 percentage points higher than that of attached properties (9.8%).
- Annual U.S. home price gains are forecast to slow to 4.1% by October 2023.
- The Miami-Miami Beach-Kendall, Florida, metro area posted the highest year-over-year home price increase at 22.6%, with a forecasted 4.2% YoY change. Tampa retained the No. 2 slot at 20%.
- Normal, not overvalued markets include Chicago-Naperville-Arlington Heights, Illinois at a 7.9% increase and Los Angeles-Long Beach-Glendale, California at a 6.1% increase.
- Florida and South Carolina recorded the highest home price gains, 20.2% and 16.1%, respectively. Georgia and North Carolina tied for third, with 15.3% year-over-year increases. Washington, D.C. ranked last for appreciation at 0.2%.
- The top markets at risk of home price declines are Bellingham, Washington; Bremerton-Silverdale, Massachusetts; Crestview-Fort Walton Beach-Destin, Florida; Tacoma-Lakewood, Washington and Salem, Oregon all at a very high risk of +70% probability.
“Following the recent mortgage rate surge above 7%, real estate activity and consumer sentiment regarding the housing market took a nosedive,” said Selma Hepp, interim lead of the Office of the Chief Economist at CoreLogic. “Home price growth continued to approach single digits in October, and it will move in that direction for the rest of the year and into 2023.”
“However,” Hepp continued, “while some housing markets have seen significant recalibration since the spring price peak and are likely to post losses in 2023, further deteriorating for-sale inventory, some relief in mortgage rate increases and relatively positive economic news may help eventually stabilize home prices.”
For the full report, visit www.corelogic.com/tag/home-price-index.