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%, according to a new report from CoreLogic released this week.
As CoreLogic’s August Home Price Index states, this is the lowest year-over-year appreciation recorded since April 2021 and partially reflects 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.
Key highlights:
- In August, annual appreciation of detached properties (13.7%) was 0.9 percentage points higher than that of attached properties (12.8%).
- 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, Florida dropped to the second spot at 26.9%.
- 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, with North Carolina in third at 19.9% and Washington, D.C. in last at 2.4%.
- The metro area markets most at risk of home price declines are Crestview-Fort Walton Beach-Destin, Florida; Bremerton-Silverdale, Washington; Bellingham, Washington; Boise City, Idaho; and Reno, Nevada all tied at a very high risk of +70% probability.
Major takeaway:
According to the report, annual U.S. home price gains are forecast to slow to 3.2% by August 2023.
“The increased cost of homeownership has dampened buyer demand and caused prices to decelerate at a faster pace than initially expected,” said Selma Hepp, interim lead of the Office of the Chief Economist at CoreLogic. “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.”
For the full report, click here.
