CoreLogic economist believes housing downturn will continue to push prices down
US home price growth continued to move closer to single digits in September as the overheated housing market goes through a major correction.
The latest S&P CoreLogic Case-Shiller report showed that home prices dived to a 10.6% annual gain, down from 12.9% in August. That sharp drop marked the sixth consecutive monthly decline and the slowest since December 2020. Historically, home prices have increased by around 1% from spring to September.
“Housing markets continue to face a loss of consumer confidence and the ongoing standoff between buyers and sellers,” said CoreLogic deputy chief economist Selma Hepp. “Potential buyers are held back by the rapidly rising cost of homeownership and fears of price declines. At the same time, potential sellers continue to contend with the lock-in effect of notably lower mortgage rates than the current market rates, which financially disincentivizes them from moving.”
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The 10-City Composite annual increase fell to 9.7% in September from 12.1% the previous month. The 20-City Composite was down to 10.4% from 13.1% month over month. According to CoreLogic, all 20 cities registered lower price gains in September compared to the month before.
“For the remainder of the year, housing market activity will continue to be depressed, both due to seasonality and fall’s vast surge in mortgage rates, which will keep the home price growth rate moving closer to low single digits,” Hepp said. “Nevertheless, while home price deceleration is likely to continue into next year, prolonged seller reluctance and forecasts of only a brief recession may keep annual appreciation flat throughout 2023, with only some regions of the country seeing price declines. In addition, the recent dip in mortgage rates could continue if future reports show progress toward moderating inflation, which may help draw some buyers off the fence and ease the deadlock.”
