First American economist hopeful for ‘just right’ price appreciation in 2024

Peak appreciation appears to be in rearview as rate of gains cools

Here’s some news that’s sure to bring hopeful smiles to the faces of prospective homebuyers nationwide: Peak national home price appreciation appears to be behind us, according to the newest figures from the data and analytics division of First American Financial Corp.

According to the latest iteration of First American’s Home Price Index (HPI) report, prices increased 0.3% month over month, hitting a 10th consecutive peak in January. But Mark Fleming, chief economist at First American, appears confident that while more new highs may be on the way, the rate of gains is cooling.

“The pace of annualized home price appreciation peaked in December, as buyers rushed to take advantage of falling mortgage rates,” he explained. “In January, the preliminary estimate of annualized appreciation cooled modestly by half a percent and is likely to slow down further in the coming months. Despite concern that house prices could decline significantly at the beginning of 2023, rate-locked potential home sellers kept supply tight, maintaining pressure on prices. Optimism that mortgage rates will fall in 2024 may incent more homeowners to sell, boosting supply and, in turn, improving affordability for buyers.”

Annual price growth in January was at a rate of 7.2% — down, as Fleming mentioned, by 0.5% from December’s 7.7% peak.

The deceleration in home price gains is evident in First American’s metropolitan-level data. None of the 30 core-based statistical areas (CBSAs) tracked by First American posted a year-over-year decrease in HPI. Of the markets within those CBSAs, Nassau County saw the largest annual HPI increase at 10.7%, followed by Anaheim, California, at 10.2%; Warren, Michigan at 9.6%; and Miami at 9.4%.

But the vast majority of those CBSAs have already left their price peaks in the rearview, Fleming noted.

“While house prices increased in all 30 markets tracked by our index over the last year, this rising tide hides the change in market prices since their peak,” he said. “Measuring the price change in each market from their post-pandemic peak reveals that house prices are below their prior peaks in 23 of the top 30 markets. Notably, house prices are currently 6% or more below their prior peak in six markets, with the largest price declines from peak in Oakland (-13.5 percent); Austin (-9.9 percent); and Seattle (-9.2 percent).”

Fleming projected hope that, after a few turbulent years, discovery of the housing market’s elusive Goldilocks price point isn’t too far at hand.

“While more supply and improved affordability should cool post-pandemic hot house price appreciation, 2024 may still be the year that house price appreciation doesn’t get too cold, but closer to just right.”


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