Price Appreciation Continues To Cool

Home price appreciation continued to cool in September though growth remained elevated from a year earlier, according to new data.

The S&P CoreLogic Case-Shiller National Home Price NSA Index saw home prices decelerate, posting a 10.6% annual gain in August, down from 12.9% in the previous month.

Craig J. Lazzara, Managing Director at S&P DJI, said all three composites are above their historical medians but peaked about six months ago.

“As has been the case for the past several months, our September 2022 report reflects short-term declines and medium-term deceleration in housing prices across the U.S.,” he said.

“As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be more expensive and housing becomes less affordable. Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to weaken.”

The 10-City Composite reported a 9.7% increase YOY, down from 12.1% in August, while the 20-City Composite rose by 10.4% YOY, down from 13.1%.

Miami saw the highest annual price gains once again, up 24.6% YOY, followed by Tampa (23.8%) and Charlotte (17.8%).

According to the latest Federal Housing Finance Agency House Price Index, house prices were up 12.4% YOY and 0.1% from August.

“House prices were flat for the third quarter but continued to remain above levels from a year ago,” said William Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics.

“The rate of U.S. house price growth has substantially decelerated. This deceleration is widespread with about one-third of all states and metropolitan statistical areas registering annual growth below 10%.”

For the nine census divisions, the South Atlantic division recorded the strongest four-quarter appreciation at 17%, while the Pacific performed worst, with prices rising by 8.3% between the third quarters of 2021 and 2022.

Starts for both single- and multi-family units dropped by 4.2% month-over-month in October.

As affordability continues to weaken and buyers are priced out of the market, appreciation is beginning to cool. Prices fell in 15 out of the top 50 U.S. markets in September, as high-interest rates and home prices force buyers out of the market, according to data from First American.

Pandemic boomtowns have been particularly susceptible to cooling prices. Austin and Phoenix posted increases YOY, but those gains are down by more than 20% from their peaks.