CoreLogic’s Home Price Insights report for April revealed a 2% year-over-year increase in U.S. home prices during the month, signaling residential price strength even as mortgage rate turbulence has dented demand.
Low for-sale listings have propped up prices in what thus far has been an abnormally slow spring purchase season. The culprits for buyer reluctance are obvious: elevated and volatile interest rates combined with macroeconomic uncertainty. Nevertheless, April marked 135 straight months of annualized price growth, according to CoreLogic, although it was the sixth consecutive month where growth has been in single digits. April’s month-over-month price gain, meanwhile, was stout at 1.2%.
“While mortgage rate volatility continues to cause buyer hesitation, the lack of for-sale homes is putting firm pressure on prices this spring, leading to above-average seasonal monthly gains and a rebound in home prices in most markets,” said Selma Hepp, CoreLogic’s chief economist. “Nevertheless, the recent surge in mortgage rates and continued inflation issues suggest that rates may remain elevated, leading home price appreciation to possibly relax this summer and return to average seasonal gains later in 2023.”
A return to historical averages, according to Hepp, should mean year-over-year gains in the 4% range, perhaps by the fall. CoreLogic then expects price growth to regain momentum and jump to 4.6% by April 2024.
Geographical divergence in home price growth remains widespread. Indiana saw the largest annual home price increase at 7.3%, joined by New Jersey (7.1%) as the only states to exceed the 7% threshold. Missouri, South Carolina and Vermont all trailed closely at 6.9%.
On the flipside, the western U.S. continues to experience ongoing price corrections, with Arizona, California, Colorado, Idaho, Montana, Nevada, Oregon, Utah and Washington all experiencing yearly declines. Only one state east of the MIssissippi — New York — saw prices decline compared to April 2022, although the District of Columbia also saw an annualized decrease.