Home prices continue to lose ground, but the Southeast remains strong
The Case-Shiller and FHFA housing indices for December showed further cooling of home prices in all metros.
- Higher mortgage rates kept price gains low in December.
- The best performers were all in the Southeast, with Miami in the lead for the fifth straight month.
- The West continues to show slow gains, with annual declines in some markets.
Home prices continued rising at a slower pace for the sixth straight month in December, with annual price declines reported in San Francisco and Seattle, according to two economic indices released Tuesday.
The monthly seasonally adjusted Case-Shiller index fell .3% for December, while the FHFA seasonally adjusted index dropped .1%.
Case-Shiller: All cities lost ground, but the Southeast remains strong
Case-Shiller data is on a six-month streak of lower home prices overall for the 10-city and 20-city indexes. The 10-city composite annual increase was 4.4%, and the 20-city composite rose 4.6% — both down around 2 points from the previous month.
The national index posted a 5.8% yearly gain in December, down from 7.6% the prior month.
Miami, Tampa, and Atlanta had the biggest increase among the core markets for December. Miami was in the lead for the fifth straight month with a 15.9% increase, followed by Tampa with a 13.9% increase and Atlanta at 10.4%.
Despite the respectable increases in the leading markets, all 20 cities had month-over-month declines in December, and two metros posted annual declines: San Francisco, which was down -4.2% year-over-year, and Seattle, which dropped -1.8% year over year.
"Unsurprisingly, the Southeast and South were the strongest regions, and the West continued as the weakest," said Craig J. Lazzara, Managing Director at S&P DJI.
Lazzara said higher interest rates amid inflation continue to concern consumers. He also predicted that home prices will continue to rise at a slower pace.
"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," Lazzara said. "Given these prospects for a challenging macroeconomic environment, home prices may well continue to weaken."
Added Lisa Sturtevant, Bright MLS chief economist: "It's possible that housing market activity hit bottom in December and that the housing market has begun to rebound in the first two months of 2023. However, there is still a lot of uncertainty in the market."
FHFA: National price growth nearly flat since Q3
The FHFA reported annual home prices rose 8.4% in the fourth quarter of 2022. House prices were up .3% from the third quarter of 2022, but down .1% between November and December.
"House price appreciation continued to wane in the fourth quarter," said Nataliya Polkovnichenko, FHFA economist for research and statistics. "House prices grew at a much slower pace in recent quarters amid higher mortgage rates and a decline in mortgage applications. These negative pressures were partially offset by historically low inventory."
Similar to the Case-Shiller findings, the Southeast fared the best, though Hawaii and Maine were strong runners-up. The five states with the biggest gains were Florida at 15.2%, North Carolina at 13.4%, South Carolina at 12.9%, Hawaii at 12.8%, and Maine at 12.2%.
Western states posted small gains, and the District of Columbia lost ground. Areas with the slowest annual growth were Washington, D.C., at -.8%, California at 2.3%, Idaho at 3.1%, Oregon at 3.6%, and Washington at 3.7%.
Across metropolitan areas, house prices rose in all but six of the top 100 areas over the last four quarters. North Port-Sarasota-Bradenton, FL, posted the biggest annual gain at 20.1%.
The metropolitan area with the biggest price drop was Oakland-Berkeley-Livermore, CA, at -4.3%.