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Home price gains slowed remarkably in the final month of 2022, according to data released Tuesday by the data analytics company CoreLogic and the Federal Housing Finance Agency.
Price growth of U.S. homes dropped to a 5.8 percent annual gain in December, down from a 7.6 percent annual gain the previous month, according to CoreLogic’s latest S&P CoreLogic Case-Shiller Index.
On a month-over-month basis, national home prices posted a .8 percent decrease, while composites representing the 10 and 20 largest cities posted declines of 0.8 and 0.9 percent respectively.
December marked the sixth-consecutive month of cooling home prices throughout 2022.
“The cooling in home prices that began in June 2022 continued through year end, as December marked the sixth consecutive month of declines for our National Composite Index,” Craig J. Lazzara, Managing Director at S&P DJI said in a statement. “The National Composite declined by -0.8% in December, and now stands 4.4% below its June peak. For 2022 as a whole, the National Composite rose by 5.8%, the 15th-best performance in our 35-year history, although obviously well below 2021’s record-setting 18.9% gain. We could record similar observations in the 10- and 20-City Composites.”
The 10 city composite recorded an annual increase of 4.4 percent, down from 6.3 percent the previous month, while the 20 city composite recorded a 4.6 percent year over year gain, down from 6.8 percent the previous month.
“All of the 20 cities in the index recorded lower yearly advances during the month. Miami, Tampa and Atlanta posted the largest price gains, but pricing momentum is on a clear slowdown trajectory,” Realtor.com Senior Economist George Ratiu said in a statement.
Tuesday also saw the release of the Federal Housing Finance Agency’s quarterly House Price Index, which reported an annual increase of 8.4 percent between the fourth quarters of 2021 and 2022, and a 0.3 percent increase in home prices between the third and fourth quarters of 2022, representing a slowing in price growth compared to the third quarter when prices grew at an annual rate of 12.4 percent.
“House price appreciation continued to wane in the fourth quarter” said Dr. Nataliya Polkovnichenko, a supervisory economist in the FHFA’s Division of Research and Statistics. “House prices grew at a much slower pace in recent quarters amid higher mortgage rates and a decline in mortgage applications. These negative pressures were partially offset by historically low inventory.”
Late 2022 saw mortgage rates hit a peak of around 7 percent, all but slowing the housing market to a halt. The beginning of 2023 saw rates drop off towards 6 percent, breathing new life into the market, but they have since climbed again leading experts to predict another slowdown.
“January brought about some new energy to the market,” Zillow Senior Economist Nicole Bachaud said in a statement. “Mortgage rates drifted down, boosting buyer demand. Enough to possibly slow the cooldown in prices in the beginning of the year.”
“But as rates are right back up in February,” she added, “it’s likely that any momentum in this market will be short lived and affordability challenges will remain key to the direction and speed the market moves in the coming months.”