US home prices continue to cool off, reflecting weak housing market
“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. “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.”
Only nine states posted double-digit annual price increases in December, compared with 48 that reported double-digit gains in April. Hepp noted that the pandemic-induced migration to suburban, exurban and rural areas might be winding down as part of the workforce gradually returns to offices.
“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. “And 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.”
The year-over-year price appreciation of attached properties (7.8%) was 1.3 percentage points higher than that of detached properties.
“Rising interest rates will lead to many homeownership dreams deferred, but the demand for single-family homes in desired locations will remain high,” commented Justin Barry, Partner at Morris, Manning & Martin.