The trend of declining home price gains continued in January across the United States, with several markets reporting price decreases, according to the latest S&P CoreLogic Case-Shiller U.S. National Home Price Index. San Francisco, San Diego, Seattle, and Portland, Oregon, all experienced price declines in January.
The index, which covers all nine U.S. census divisions, reported a 3.8% annual gain in January, a drop from 5.6% annual growth in December. The 10-City Composite and 20-City Composite indices both posted annual increases of 2.5%.
“The newly released Case-Shiller Index showed that prices began 2023 where 2022 left off, with broad-based deceleration. On an unadjusted basis, 19 of 20 composite markets again declined month over month. Miami was the lone rise, climbing 0.1% from December 2022,” says Nik Scoolis, manager, housing economics, for Zonda. “It is important to keep in mind that the Case-Shiller indices are lagging indicators and backward looking. February showed renewed life in the housing market with sales climbing higher month over month. The pickup in demand may cause pricing to stop its downward trend.”
Miami (+13.8%); Tampa, Florida (+10.5%); and Atlanta (+8.4%) once again reported the highest year-over-year gains in prices among the 20 cities analyzed in January. However, all analyzed cities reported lower prices in the year ending January compared with the year ending December 2022.
“January’s market weakness was broadly based. Before seasonal adjustment, 19 cities registered a decline; the seasonally adjusted picture is a bit brighter, with only 15 cities declining,” says Craig Lazzara, managing director at S&P Dow Jones Indices. “With or without seasonal adjustment, most cities’ January declines were less severe than their December counterparts.”
Before seasonal adjustment, the U.S. National Index posted a 0.5% month-over-month decrease in January, while the 10-City and 20-City Composites posted decreases of 0.5% and 0.6%, respectively.
“One of the most interesting aspects of January’s report is the continued weakness in home prices on the West Coast, as San Diego and Portland joined San Francisco and Seattle in negative year-over-year territory,” Lazzara says. “It’s therefore unsurprising that the Southeast (+10.2%) continues as the country’s strongest region, while the West (-1.5%) continues as the weakest.”
Lazzara says the Federal Reserve’s focus on inflation-reduction targets in the wake of instability in the banking sector will likely keep interest rates elevated in the near-term. According to Lazzara, mortgage financing and “the prospect” of economic weakness” are likely to remain a headwind for housing prices “for at least the next several months.”
