Home Price Growth Fell From Q3 To Q4 2022

Annual single-family home price growth dipped from Q3 2022 to Q4 2022, according to Fannie Mae’s Home Price Index.

Prices rose by 9.2% YOY in Q4, down from 13.1% in Q3. They increased just 0.2% quarter-over-over when seasonally adjusted, and fell 1% unadjusted.

The index measures the average quarterly price change for all single-family properties in the United States, excluding condos.

“The rise in mortgage rates over the past year and record inflation have constrained the purchasing power of prospective homebuyers. The resulting affordability pressures are evident in the home price declines of the past two quarters, along with the downturn in home sales,” said Mark Palim, Fannie Mae Vice President and Deputy Chief Economist.  

Demand has dwindled as many homebuyers are priced out of the market by sky-high prices and rates. Buyers who could afford a home when interest rates were at historical lows found that in 2022, they couldn’t afford anything.

Pending home sales recently fell to their lowest recorded level ever.

The pace of sales has slowed as well, with the typical home sold during the four weeks ending January 8 on the market for 44 days, the longest period since April 2020.

Palim also noted the “lock-in effect” that propels homeowners to stay in the same place longer, wanting to keep their low interest rate from prior years.

“We believe that a key factor that will impact home prices in 2023 is how the tension between a reduced supply of homes available for sale and lower mortgage demand is resolved,” he said.

Single-family housing starts dipped in December in response to low demand. Multifamily continued to see strong gains, however, as prospective buyers priced out of the market seek out affordable apartments.

Though inventory overall saw a record uptick in November thanks to houses lingering on the market, new home inventory fell by 20%.

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