Major city home prices fell in December-0.8% m/m, worse than the -0.5% expected. The fall was heavier year-over-year with prices now up +4.6% vs +5.8% expected and from the prior y/y +6.8% according to the latest S&P/Case-Shiller index. All 20 cities in the index recorded declines in the year ending December 2022 versus the year ending November 2022. The median decline was -1.1%. Housing affordability continues to be crushed in America with higher mortgage interest rates and inflation.
Prices are falling fastest in West Coast markets. San Francisco had fallen on a year-over-year basis. San Francisco’s decline worsened in December (-4.2% year-over-year); its west coast neighbors Seattle (-1.8%) and Portland (+1.1%) once again form the bottom of the league table.
Composite Home Price Indices.
“The cooling in home prices that began in June 2022 continued through year end, as December marked the sixth consecutive month of declines for our National Composite Index,” says Craig J. Lazzara, Managing Director at S&P DJI. “The National Composite declined by -0.8% in December, and now stands 4.4% below its June peak. For 2022 as a whole, the National Composite rose by 5.8%, the 15th best performance in our 35-year history, although obviously well below 2021’s record-setting 18.9% gain. We could record similar observations in the 10- and 20-City Composites..”
S&P CoreLogic December 2022 Highlights
- S&P CoreLogic CS 20-City (M/M) SA Dec: -0.51% (exp -0.40%; prevR -0.52%)
- S&P CoreLogic CS 20-City (Y/Y) NSA Dec: 4.65% (exp 4.80%; prevR 6.76%)
- S&P CoreLogic CS US HPI (Y/Y) NSA Dec: 5.76% (prevR 7.62%)
The Federal Reserve continues to raise interest rates making mortgage financing more expensive. We saw 30-year fixed-rate mortgage over 7%, up from 2.88% from a year earlie
“The prospect of stable, or higher, interest rates means that mortgage financing remains a headwind for home prices, while economic weakness, including the possibility of a recession, may also constrain potential buyers. Given these prospects for a challenging macroeconomic environment, home prices may well continue to weaken.”
“The cooling in home prices that began in June 2022 continued through year end, as December marked the sixth consecutive month of declines for our National Composite Index,” says Craig J. Lazzara, Managing Director at S&P DJI. “The National Composite declined by -0.8% in December, and now stands 4.4% below its June peak. For 2022 as a whole, the National Composite rose by 5.8%, the 15th best performance in our 35-year history, although obviously well below 2021’s record-setting 18.9% gain. We could record similar observations in the 10- and 20-City Composites.
““Prices fell in all 20 cities in December, with a median decline of -1.1%. Moreover, for all 20 cities, year-over-year gains in December (median 4.4%) were lower than those of November (median 6.4%). We noted last month that home prices in San Francisco had fallen on a year-over-year basis. San Francisco’s decline worsened in December (-4.2% year-over-year); its west coast neighbors Seattle (-1.8%) and Portland (+1.1%) once again form the bottom of the league table.”
Location Changes
December’s best performers were all in the Southeast:
- Miami (+15.9%) in the lead for the fifth straight month.
- Tampa (+13.9%)
- Atlanta (+10.4%)
- Charlotte (+9.9%).
The Southeast (+12.5%) and South (+11.6%) were the strongest regions, and the West (+1.2%) continuing as the weakest.
Weakest performers were in the West again
- San Francisco’s decline worsened in December (-4.2% year-over-year);
- Seattle (-1.8%)
- Portland (+1.1%)
- San Francisco and Seattle peaked in May 2022, and both have declined by more
than -10% since then.
Prices are falling fastest in West Coast markets.
FHFA House Price Index December 2022 Highlights
The FHFA House Price Index (M/M) Dec: -0.1% (exp -0.2%; prev -0.1%)
Source: S&P Global
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