The most recent CoreLogic Home Price Insights report revealed that while home price growth train keeps on chugging, it continues to lose steam.
Home prices nationwide, including distressed sales, rose 3.1% year over year in March 2023, according to CoreLogic. It’s the 134th straight month of home price gains but the slowest rate of growth since mid-2012. In fact, while prices are still up nationally, 10 states actually saw home prices drop during the year. Nine of these states — Washington, Idaho, Nevada, Utah, California, Montana, Oregon, Colorado and Arizona — are in the West, which continues to struggle with a dearth of affordability brought about by persistently short supply.
Demand for homes in higher price tiers is also slowing faster than that of middle-priced properties, pulling back appreciation in the expensive West at a higher rate than in other parts of the country.
On a month-over-month basis, home prices increased by 1.6%, with some inventory-driven price recovery in many large cities helping fuel a second consecutive monthly climb.
“While housing markets across the country continue to send mixed signals, prices in many large metros appeared to have turned the corner, with the U.S. recording a second month of consecutive monthly gains,” said Selma Hepp, CoreLogic chief economist. “At 1.6%, the month-over-month increase was twice the average seen between 2015 and 2020.”
“The monthly rebound in home prices underscores the lack of inventory in this housing cycle,” Hepp continued. “In addition, while the lack of affordability generally weighs on home price growth, mobility resulting from remote working conditions appears to be a current driver of home prices in some areas of the country.”
Many metros are still showing price strength on an annualized basis, especially in the Sun Belt. Among metros tracked by CoreLogic, Miami saw the largest year-over-year price gain at 14.8%, followed by Tampa at 6.9%.
Still, several economic factors (including inflation, a softening labor market, elevated interest rates and a potential recession) continue to keep many potential homebuyers on the sidelines. Some of these conditions seem likely to persist in the short and medium term, leading CoreLogic to predict that annualized price growth will trend downward through the spring and early summer before a bounce back later in the year. The company expects a 4.6% increase in home prices by March 2024.
