The S&P Case-Shiller Home Price Index declined 0.6% month-over-month in January of 2023, a seventh consecutive decline, with 19 cities registering a drop and continued weakness in home prices on the West Coast where prices are falling fastest. Year over year the S&P CoreLogic Case-Shiller 20-city home price index in the US rose 2.5% year-on-year in January of 2023, the smallest increase since November of 2019, following a 4.6% rise in December, and in line with market forecasts.
Composite Home Price Indices.
“Mortgage financing and the prospect of economic weakness are likely to remain a headwind for housing prices for at least the next several months”, according to Craig J. Lazzara, Managing Director at S&P DJI. ”
S&P CoreLogic January 2023 Highlights
- S&P CoreLogic CS 20-City (M/M) SA Jan: -0.43% (est -0.50%; prevR -0.53%)
- S&P CoreLogic CS 20-City (Y/Y) NSA Jan: 2.55% (est 2.60%; prevR 4.62%)
- S&P CoreLogic CS US HPI (Y/Y) NSA Jan: 3.79% (prevR 5.63%)
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
“2023 began as 2022 had ended, with U.S. home prices falling for the seventh consecutive month,” says Craig J. Lazzara, Managing Director at S&P DJI. “The National Composite declined by 0.5% in January, and now stands 5.1% below its peak in June 2022. On a trailing 12-month basis, the National Composite is only 3.8% ahead of its level in January 2022, a result also reflected in our 10- and 20-City Composites (both +2.5% year-over-year).”
“January’s market weakness was broadly based. Before seasonal adjustment, 19 cities registered a decline; the seasonally adjusted picture is a bit brighter, with only 15 cities declining. With or without seasonal adjustment, most cities’ January declines were less severe than their December counterparts.”
“Financial news this month has been dominated by ructions in the commercial banking industry, as some institutions’ risk management functions proved unequal to the rising level of interest rates. Despite this, the Federal Reserve remains focused on its inflation-reduction targets, which suggest that rates may remain elevated in the near-term. Mortgage financing and the prospect of economic weakness are therefore likely to remain a headwind for housing prices for at least the next several months.”
Location Changes
December’s best performers were all in the Southeast:
- Miami (+13.8%) in the lead for the sixth straight month.
- Tampa (10.5%),
- Atlanta (8.4%)
“Miami (+13.8% year-over-year) was the best performing city in January, extending its winning streak to six consecutive months. Tampa (+10.5%) and Atlanta (+8.4%) continued in second and third place, with Charlotte (+8.1%) not far behind. At the other end of the scale, one of the most interesting aspects of January’s report is the continued weakness in home prices on the West Coast, as San Diego and Portland joined San Francisco and Seattle in negative year-over-year territory. It’s therefore unsurprising that the Southeast (+10.2%) continues as the country’s strongest region, while the West (-1.5%) continues as the weakest.
Weakest performers were in the West again
- San Francisco’s decline worsened -7.6%,
- Seattle (-5.1%),
- San Diego (-1.4%)
- Portland (-0.5%).
- 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 January 2023 Highlights
The FHFA House Price Index (M/M) rose in Jan: +0.2% (exp -0.1%; prev -0.1%)
Source: S&P Global
From The TradersCommunity News Desk