Home price growth continues downward trend, Case-Shiller reports
Price gains slowed in October for the fourth straight month, dipping to 9.2% year-over-year, down from around 20% during the first half of the year.
- The South and Southeast fared the best among U.S. regions, posting more than double the gains of the Northwest, Midwest and West.
- Two Florida cities were the biggest winners in Case-Shiller’s 20-city composite, with a pair of once-hot cities in the West posting the worst performances.
- The "housing market is definitely in correction mode," said Bright MLS chief economist Lisa Sturtevant.
Growth in home prices slowed in October for the fourth straight month, with year-over-year gains declining to 9.2% from more than 10% the previous month, according to the latest S&P CoreLogic Case-Shiller Index report.
"Prices do tend to fall seasonally in the second half of the year, but this year's steady downturn in price growth indicates the housing market is definitely in correction mode," said Lisa Sturtevant, chief economist with Bright MLS.
"In May 2022, the index was up 20% year over year. So basically prices were rising 20% on an annual basis back in the spring. Since then, that year-over-year change has decreased six months in a row, landing us at 9.2% in October," Sturtevant told Real Estate News.
The slowdown in home price growth has not been enough to bring a substantial number of buyers back to the market, after several years of spiking home values coupled with higher mortgage rates in 2022.
Looking by region, the South and Southeast reported the biggest gains, which were more than twice the rate of increase in the Northwest, Midwest and West, according to Case-Shiller.
The previously overheated real estate market in the West had the two weakest performers: San Francisco, up .6% year over year, and Seattle, posting a 4.5% increase.
Two Florida cities — Miami and Tampa — had the highest year-over-year gains among the cities ranked in Case-Shiller's 20-city composite index. Florida metros have continued to show significant growth throughout 2022 even as other markets have lagged.
Miami had a 21% price increase, with Tampa at 20.5%. Charlotte was third with a 15% increase, and Atlanta fourth at 14.9%. But all 20 cities reported slower year-over-year growth compared to the previous month.
The 20-city composite overall had an 8.6% gain, a drop from 10.4% in September.
"Despite considerable regional differences, all 20 cities in our October report reflect these trends of short-term decline and medium-term deceleration. Prices declined in every city in October, with a median change of -0.9%," said Craig J. Lazzara, managing director of S&P DJI.
Lazzara forecasted that price growth will continue to slow amid higher mortgage costs as the Fed raises overall interest rates to slow inflation. "Higher mortgage financing continues to be a headwind for home prices. Given the continuing prospects for a challenging macroeconomic environment, prices may well continue to weaken," Lazarra said.
Sturtevant also predicted home prices will continue to be cooler for the rest of December and into 2023. "While there could be localized year-over-year price declines in the coming months, relatively strong demand, low inventory, and declining mortgage rates will keep the overall median home price steady in the year ahead," Sturtevant said.
She noted that it's important to put the monthly Case-Shiller report in perspective. "Although price growth was lower in October than it had been during the height of the pandemic housing market, the pace of annual price appreciation is still nearly double the historic average," Sturtevant said.