The third quarter of 2022 brought the slowest quarterly price growth since Q4 2011, showing just how quickly home prices are changing as the market rebalances.
Single-family home prices rose 13.8% YOY in Q3 2022, slowing from last quarter’s 19.1%, according to Fannie Mae’s Home Price Index.
The Index measures average quarterly price change for all single-family U.S. properties except condos.
Prices were up only 0.2% from Q2, their slowest quarter since 2011.
“Year-over-year home price growth decelerated in the third quarter, as the sharp rise in mortgage rates – and declining housing affordability – appears to have weighed further on demand,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.
He added that many homeowners who might want to sell feel “locked-in” by their existing interest rate, keeping them in their current homes and depressing both inventory and the number of prospective buyers.
“Furthermore, the supply of completed, new single-family homes for sale has begun to rise, suggesting that homebuilders may also need to begin offering greater price concessions to move inventory. We expect these trends to continue in the coming months,” he said.
As buyers dwindle, home sellers who enjoyed high competition last year are having to adjust their expectations.
“Just north of Austin, TX, there’s a home that listed four months ago for $675,000. In these four months, it’s gone down to $610,000, and it also includes a seller concession of $5,000 towards closing costs because they need to move it, “ Claudia Lawrence of Vortex Realty told The Mortgage Note.
Home listing price cuts reached a record high of 7.9% last month as homebuyer demand fell 25% from a year earlier.
Cities like Austin, which saw sky-high demand and high home price appreciation during the Great Migration, are seeing faster turnarounds than other parts of the country.
“Homebuyers have not had this much leverage and this many options in over a decade,” Cord Shiflet, 2022 president of the Austin Board of Realtors, said.
“We’re still in a seller’s market, but as homes take longer to sell and are being bought for less than the original list price on average, and with inventory steadily increasing, right now is a great time to be a homebuyer in Central Texas.”
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