National Home Price Growth Now in Single Digits

Annual price growth for homes in October grew by less than double-digits for the first time in about two years, according to the S&P CoreLogic Case Shiller national home price index, released this week.

Prices increased by 9.2% in October, down from 10.7% in September and notching the first single-digit gain since November 2020. It was the fourth consecutive month price growth declined.

In key cities tracked by the index, its 10-city composite annual increase came in at 8%, down from 9.6% in the previous month. Its 20-city composite posted an 8.6% year-over-year gain, down from 10.4% in the previous month.

The Case Shiller figure was less promising than the Federal Housing Finance Agency, which oversees US mortgage-finance entities Fannie Mae and Freddie Mac, which said annual home price growth slowed to 9.8% in October from 11.1% in September.

All 20 cities in its composite reported lower price increases in the year ending October 2022 versus the year ending September 2022, according to a release.

Miami (21% rise), Tampa (20.5%), and Charlotte (15%) reported the highest year-over-year gains among the 20 cities in October, according to a release.

Short-term decline, Medium-Term Deceleration

Craig J. Lazzara, Managing Director at S&P DJI, said in prepared remarks that these declines, “came after very strong price increases in late 2021 and the first half of 2022. Despite its recent weakness, on a year-over-year basis, the national composite’s gains are in the top quintile of historical performance levels.”

Lazzara said that despite considerable regional differences, all 20 cities in the October report reflect trends of short-term decline and medium-term deceleration.

“As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices,” Lazzara said. “Given the continuing prospects for a challenging macroeconomic environment, prices may well continue to weaken.”

Relief for Buyers Sitting on Sidelines

A more affordable housing market will be welcome news for buyers currently sitting on the sidelines, according to Mark Fleming, chief economist, First American Financial Corporation (FAFC), as reported this week by GlobeSt.com.

“Given the large loss of affordability buyers experienced this year, a possible improvement next year will be a welcome relief for potential buyers.”

California Existing Sales Down 47.7% in November

Looking at November, Bill McBride, writing in the Calculated Risk blog, said the big story for existing home sales was the sharp year-over-year (YoY) decline in sales and that new listings were down further YoY in November as many potential sellers are locked into their current home (low mortgage rate).

Active inventory increased sharply YoY and “sales in some of the hottest markets are down around 40% YoY (all of California was down 47.7%), whereas in other markets, sales are only down around 20% YoY.”