Record home prices plateau as housing market "recalibrates"
US home price appreciation remains flat nationwide.
US home prices have finally stalled, posting two straight months of near-zero appreciation.
The Federal Housing Finance Agency reported house prices experienced a 0.0% change in October. Price gains began slowing down to a 0.1% pace in September and decelerated to a single-digit rate for the first time in two years (+9.8% year over year in October).
“Higher mortgage rates continued to put downward pressure on demand, weakening house price growth,” said Nataliya Polkovnichenko, supervisory economist in FHFA’s research and statistics division. “The US house price index growth decelerated as it posted the first 12-month growth rate below 10% after 24 consecutive months of double-digit appreciation rates.”
On a seasonally adjusted basis, month-over-month house price gains in the nine census divisions ranged from -0.9% in the Pacific division to +1.4% in the New England division. Annual price changes were also positive, ranging from +4.5% in the Pacific division to +14.1% in the South Atlantic division.
A CoreLogic forecast expects home prices to remain flat in November and climb on a 4.1% year-over-year basis.
“Following the recent mortgage rate surge above 7%, real estate activity and consumer sentiment regarding the housing market took a nosedive,” said Selma Hepp, interim lead and deputy chief economist of CoreLogic. “Home price growth continued to approach single digits in October, and it will move in that direction for the rest of the year and into 2023.
“However, while some housing markets have seen significant recalibration since the spring price peak and are likely to post losses in 2023, further deteriorating for-sale inventory, some relief in mortgage rate increases and relatively positive economic news may help eventually stabilize home prices.”
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