Home prices are on the rebound
The latest Case-Shiller Index found that after falling in the second half of 2022, home prices have been trending up since January.
Key points:
- Home prices across 20 metro areas rose 1.3% between March and April, continuing an upward trend.
- Year-over-year, however, prices declined 0.2%, which is the first annual decline in more than a decade.
- Some West Coast metros that saw big annual price declines are now posting significant month-to-month increases, a sign of a recovery in those areas.
Home prices continued to rise this spring, adding credence to the idea that the market may have bottomed out and is beginning to rebound.
Prices rose 1.3% in April, according to the latest data from the S&P CoreLogic Case-Shiller Index. Home prices peaked in June 2022, declined until January 2023 and started recovering from that point, said Craig Lazzara, managing director at S&P Dow Jones Indices.
"If I were trying to make a case that the decline in home prices that began in June 2022 had definitively ended in January 2023, April's data would bolster my argument," Lazzara said, noting that mortgage rate levels and economic headwinds could still upend that trend in the coming months.
Bright MLS Chief Economist Lisa Sturtevant also pointed to latest data as a sign that the market may have reached bottom "with a summer rebound on the way."
On a year-over-year basis, however, home prices declined 0.2% — the first decline reported by the Index since April 2012. Home prices are now 2.4% below their June 2022 peak.
Volatile mortgage rates and a lack of homes for sale will continue to influence the housing market for the rest of the year, slowing homebuying activity to levels not seen for about a decade, said Selma Hepp, CoreLogic's chief economist.
Buyers are out there; inventory is not
The latest home price data continues to defy expectations that elevated mortgage rates would bring prices down. Higher rates do not appear to have dampened buyer interest as much as expected, and that demand has kept prices elevated, said Sturtevant.
"The key reason home prices in most markets are stable or rising is that there are a lot of buyers competing over a very low supply of homes available for sale," Sturtevant said. "Inventory is going to remain low for years, as existing homeowners are 'locked in' to extremely low mortgage rates and people are remaining in their homes longer."
All 20 metro areas covered by the Index posted increases between March and April. Boston had the biggest month-over-month increase at 2.9%, while some of the West Coast cities that posted significant price drops last fall showed a spring rebound. Seattle was up 2.3% from March to April, while San Francisco climbed 2.2% and San Diego rose by 2%.
Year-over-year, Miami continued to have the biggest price increase at 5.2%, while Seattle had the biggest drop, falling 12.4%.
Home appreciation on the rise
The Federal Housing Finance Agency, which uses loan purchasing data from Fannie Mae and Freddie Mac across all 50 states to produce its housing index, reported that homes appreciated 0.7% between March and April and rose 3.1% year-over-year.
The FHFA data also found that home appreciation varied widely in the U.S. year-over-year, ranging from a 3.8% decline in the Pacific region to a 6.1% increase in the East South Central region.