Home price gains continued to drop across the United States, according to the latest S&P CoreLogic Case-Shiller U.S. National Home Price Index. The index, which covers all nine U.S. census divisions, reported a 5.8% annual gain in December, decelerating from 7.6% annual growth in November.
The 10-City Composite annual increase was 4.4% in December, down from 6.3% in November, while the 20-City Composite Index posted a 4.6% year-over-year gain, down from 6.8% in November.
“Home prices continued to decelerate to end the calendar year, the sixth consecutive month-over-month declines,” says Nik Scoolis, manager, housing economics, for Zonda. “The annual gain nationally was 5.8%, down from the prior month and now at the lowest level since July 2020. Important to note, the Case-Shiller Index is a lagging indicator and doesn’t yet capture the increase in activity seen in January 2023.”
Miami (+15.9%), Tampa, Florida (+13.9%), and Atlanta (+10.4%) reported the highest year-over-year gains in prices among the 20 cities analyzed for December. All 20 cities reported lower prices in the year ending December compared with the year ending November 2022.
“Prices fell in all 20 cities in December, with a median decline of -1.1%. Moreover, for all 20 cities, year-over-year gains in December (median 4.4%) were lower than those of November (median 6.4%),” says Craig Lazzara, managing director at S&P Dow Jones Indices. “We noted last month that home prices in San Francisco had fallen on a year-over-year basis. San Francisco’s decline worsened in December (-4.2% year-over-year); its West Coast neighbors Seattle (-1.8%) and Portland (+1.1%) once again formed the bottom of the league table.”
Before seasonal adjustment, the U.S. National Index posted a -0.8% month-over-month decrease in December, while the 10-City and 20-City Composites posted decreases of -0.8% and -0.9%, respectively. All 20 cities reported declines in December before and after seasonal adjustments. Lazzara says the Southeast (+12.5%) and South (+11.6%) were the strongest performing regions, while the West (+1.2%) was the weakest performing region.
“The prospect of stable, or higher, interest rates means that mortgage financing remains a headwind for home prices, while economic weakness, including the possibility of a recession, may also constrain potential buyers,” says Lazzara. “Given these prospects for a challenging macroeconomic environment, home prices may well continue to weaken.”
