Prices are decelerating faster than initially anticipated.
US home prices in August experienced their lowest year-over-year appreciation since April 2021, according to the latest CoreLogic Home Price Index report.
Due to higher mortgage rates cooling buyer demand, annual home price growth slowed for the fourth straight month to a 13.5% pace, down seven basis points from July. According to CoreLogic, the monthly dip indicates reduced homebuyer enthusiasm, with nearly three-quarters of states posting declines from July.
“The increased cost of homeownership has dampened buyer demand and caused prices to decelerate at a faster pace than initially expected,” said CoreLogic chief economist Selma Hepp. “Housing markets on the West Coast and in the Mountain West, as well as second-home markets, recorded particularly strong price growth in the summer of 2021 but were the first to see month-over-month price declines during the same period this year.”
Of the country’s 20 largest metro areas, Miami registered the highest year-over-year home price gain in August at 27.1%, followed by Tampa at 26.9%. Hurricane Ian’s impact on Tampa’s housing market and other parts of Florida could cause price growth there to decelerate even more than the projected US slowdown.
CoreLogic expects home price gains to slow to 3.2% by August 2023.
“While decelerating price growth and price declines benefit younger potential homebuyers, mortgage rates that are approaching 7% may cut many hopefuls out of the picture,” Hepp said.