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Home price growth continued to cool in December as mortgage rates peaked last fall, according to new data released Tuesday by CoreLogic.
Home price growth fell 0.4 percent between November and December, while year-over-year single family price growth dropped to 6.9 percent, the lowest level recorded since the summer of 2020, the CoreLogic data shows.
December’s annual appreciation rate of 6.9 percent was down significantly from April’s peak of 20 percent — before mortgage rates began their steep ascent and slowed the housing market to a near halt during the last months of 2022 — but the rate of deceleration was slower than that recorded during the summer months, the report notes.
“The continued slowing of home prices at the end of 2022 reflects weaker housing market demand, primarily caused by higher mortgage rates and a more pessimistic economic outlook in general,” CoreLogic Chief Economist Selma Hepp said in a statement. “But while prices continued to fall from November, the rate of decline was lower than that seen in the summer and still adds up to only a 3% cumulative drop in prices since last spring’s peak.”
The report makes note that while national unemployment remains low at 3.5 percent, large-scale layoffs in sectors such as tech have had an impact on housing demand in some big expensive cities where lots of tech workers live. San Francisco and Seattle — both Tech hubs — both posted large-scale home price deceleration during November, according to CoreLogic. Idaho — a state popular with West Coast relocators who are working remotely — was the only state to post an annual decline in home price growth between November and December, falling 1 percent according to CoreLogic.
Similar to Idaho, many far-flung locations that sprung to popularity due to lockdowns and rem0te work during the early days of the pandemic — while seeing price growth skyrocket as a result — have since seen growth slow.
“Some exurban regions that became increasingly popular during the COVID-19 pandemic saw prices jump and affordability erode at the time, but these areas are now seeing major corrections,” Hepp said.
While growth stalled in December, the report notes that demand has picked up considerably during the early months of 2023 as mortgage rates retreat from their highs.
“While price deceleration will likely persist into the spring of 2023, when the market will probably see some year-over-year declines, the recent decrease in mortgage rates has stimulated buyer demand and could result in a more optimistic homebuying season than many expected,” Hepp said.
