US home prices fell for the sixth month in a row in December, as rising mortgage rates pushed prospective buyers out of the housing market, according to the latest S&P CoreLogic Case-Shiller US National Home Price Index, released Tuesday.
The National Composite declined by 0.8% in December, and now stands 4.4% below its June peak.
All cities in the 20-city index — which includes New York, Minneapolis, Phoenix and Los Angeles — reported declines before and after seasonal adjustments, with a median decline of 1.1%.
“The cooling in home prices that began in June 2022 continued through year end, as December marked the sixth consecutive month of declines for our National Composite Index,” says Craig J. Lazzara, Managing Director at S&P DJI.
Compared to prices from the year before, US home prices nudged higher in December, but the pace of that growth slowed from prior months.
Home prices rose 5.8% in December, a smaller jump than the 7.6% growth seen in November and well below 2021’s record-setting 18.9% price gain.
The cities with the strongest price appreciation were all in the Southeast, with Miami, up 15.9% from last year, seeing the strongest prices for the fifth-straight month. It was followed by Tampa, Florida, up 13.9%; Atlanta, up 10.4%, and Charlotte, North Carolina, up 9.9%. The Southeast and South were the strongest regions, and the West continued as the weakest.
In November, prices in San Francisco had fallen on a year-over-year basis and the city’s decline worsened in December, with prices down 4.2% year-over-year. In addition, prices in Seattle were also down from last year.
“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,” said Lazzara. “Given these prospects for a challenging macroeconomic environment, home prices may well continue to weaken.”
The year ended on a discouraging note both for buyers and sellers, said Nicole Bachaud, senior economist at Zillow.
“Sales declined as mortgage rates soared, new listings sputtered out and active inventory pooled up as homes stayed on the market longer,” she said.
But January brought about some fresh energy to the market as mortgage rates drifted down, boosting buyer demand.
It could have been enough home buying activity to possibly slow the cooldown in prices in the beginning of the year, Bachaud said.
“But as rates are right back up in February, it’s likely that any momentum in this market will be short lived and affordability challenges will remain key to the direction and speed the market moves in the coming months,” she said.