Annual home price growth barely remained in double digits in October, according to CoreLogic, as interest rates that climbed above 7% continued to cool the residential real estate market.
Per CoreLogic’s newest Home Price Insights report, U.S. home prices (including distressed sales) rose 10.1% year over year in October, the slowest annual gain recorded since early 2021. Affordability continues to be a factor as elevated rates contributed to the loss of homebuyer purchasing power and constriction of the buyer pool on the demand side. On the supply side, however, inventory remains low in part because sellers are opting to stay locked into the low rates they have today rather than listing their current homes and buying new ones with higher-cost loans.
“Following the recent mortgage rate surge above 7%, real estate activity and consumer sentiment regarding the housing market took a nosedive,” said Selma Hepp, interim lead at CoreLogic’s office of the chief economist. “Home price growth continued to approach single digits in October, and it will move in that direction for the rest of the year and into 2023.”
CoreLogic anticipates that year-over-year price growth may go negative by the spring of 2023 before eking its way back into single digits as the year goes on. Price growth has already gone negative on a monthly basis, backtracking by 0.1% from September to October. The company forecasts month-over-month prices to stay flat heading into November and to grow by 4.1% by October 2023.
Some areas are still seeing strong price growth, especially in warm-weather regions. Among all states, Florida and South Carolina logged the largest yearly home price gains at 20.2% and 16.1%, respectively, with Georgia and North Carolina following at 15.3% each. Across the country’s 20 largest metros, Miami saw the highest annualized increase at 22.6%, followed by Tampa at 20%.