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Home prices have fallen 2.5 percent since their peak in the spring of 2022 and are set to continue dropping, according to a new report.
By the second quarter, home prices nationally will start posting year-over-year declines before possibly rebounding by the end of the year, according to CoreLogic, a property information company that tracks home prices nationwide.
“Although home price growth has been slowing rapidly and will continue to do so in 2023, strong gains in the first half of last year suggest that total 2022 appreciation was only slightly lower than that recorded in 2021,” said Selma Hepp, deputy chief economist for CoreLogic. “However, 2023 will present its own challenges, as consumers remain wary of both the housing market and the overall economic outlook.”
CoreLogic’s monthly Home Price Index provides an early indicator of where home prices are headed, as well as monthly changes. The report released on Tuesday shows month-over-month price changes through November 2022 and a forecast through most of this year.
Home prices grew 8.6 percent nationwide in November compared with a year before despite falling 0.2 percent month-over-month. That annual increase is the lowest in the past two years, and it ends a 21-month streak of double-digit gains.
The monthly decline is expected to continue in December when prices are expected to dip 0.1 percent, CoreLogic reports. The firm expects prices will rebound toward the end of the year and increase 2.8 percent compared to where they were in November 2022.
Some markets, particularly in the Southeast, continue showing double-digit annual price increases, CoreLogic said. At the same time, other Sun Belt markets had some of the biggest declines.
The biggest annual home price increases were in Florida where prices grew by 18 percent through November, followed by South Carolina (13.9 percent) and Georgia (13.6 percent).
“While the recent decline in mortgage rates may bode well for the housing market, potential homebuyers are grappling with the idea of buying amid possible further price declines and a continued inventory shortage,” Hepp said. “Nevertheless, with slowly improving affordability and a more optimistic economic outlook than previously believed, the housing market could show resilience in 2023.”