House prices fell in January, and even fell in some cities: S&P Case-Shiller

Home prices declined in January, up just 3.8% nationally from a year earlier, according to the US S&P CoreLogic Case-Shiller NSA National House Price Index. This is less than 5.6% in December.

Prices have been falling for seven months in a row, but the decline was slightly smaller in January. Most likely, this happened due to a short-term fall in mortgage rates and, as a result, a jump in sales.

The 10-city composite rose 2.5% year-on-year from 4.4% in December. The 20-city composite also rose 2.5% from 4.6% in the previous month.

Housing prices are falling due to rising mortgage rates. The average rate on the popular 30-year fixed mortgage set more than a dozen record lows in the first two years of the pandemic, briefly dropping below 2% but rising sharply. Since autumn, the rate has hovered in a high range of 6%, although it has been volatile in recent weeks due to the failure of several banks and the resulting stress on the entire banking industry.

“Despite this, the Federal Reserve remains focused on its inflation target, which suggests rates may remain elevated in the near term,” said Craig Lazzara, managing director of S&P DJI, in a press release. “Therefore, mortgage financing and the prospect of economic weakness are likely to remain a deterrent to house prices for at least the next few months.”

Prices were lower year on year in San Francisco (-7.6%), Seattle (-5.1%), Portland, Oregon (-0.5%) and San Diego (-1.4%). They were flat in Phoenix.

Miami, Tampa and Atlanta again witnessed the fastest annual price increases among the 20 largest cities. Prices in Miami rose by 13.8%, in Tampa – by 10.5%, and in Atlanta – by 8.4%. However, all 20 cities reported lower prices for the year ending January 2023 compared to the year ending December 2022.

Homebuyers may see more flexible sellers this spring, but there are still too few homes available for sale. Mortgage lending may also tighten in light of the pressure on the banking system.

“More expensive and less affordable loans, especially with an uncertain economic outlook, are likely to continue to limit consumer demand. While home sales are expected to recover in line with seasonal trends, the pace of sales this spring is expected to remain lower than last year. as uncertainty and high costs limit activity,” said Hannah Jones, economic data analyst at Realtor.com.