In November, home prices were up by less than 9% compared to the same month in 2021, marking an end to a 21-month streak of double-digit momentum, a CoreLogic report found.
Per the data vendor’s home price index, 16 states, including Florida and South Carolina, still saw annual double-digit increases. But on average, “appreciation is decelerating in many popular housing markets across the country.”
Home prices increased 8.6% year-over-year in November, a stark change from when home price gains jumped 20.9% in April, compared to the same month in 2021. The home prices declined by 0.2% from October 2022.
CoreLogic’s economists believe that home price gains will continue to cool going into 2023, expecting them to slow to 2.8% by November.
“2023 will present its own challenges, as consumers remain wary of both the housing market and the overall economic outlook,” said Selma Hepp, deputy chief economist at Corelogic, in a written statement.
Potential borrowers are worried about a recession going into the new year, stock market instability, and homes no longer being a good investment opportunity.
However, mortgage rates declining to 6.42% in December after an all-time high of over 7% in October, may help to keep buyers engaged in searching for a house.
Hepp calls the decline in mortgage rates as something that “bodes well for the housing market.”
“Potential homebuyers are grappling with the idea of buying amid possible further price declines and a continued inventory shortage,” she said. “Nevertheless, with slowly improving affordability and a more optimistic economic outlook than previously believed, the housing market could show resilience in 2023.”
Some reports have pointed out that first-time homebuyers, who were losing out to older, repeat buyers may be benefiting from today’s market trends.
Home sales are expected to increase in late January.