U.S. home prices increased 0.5% on an adjusted basis in April compared with March but were down 0.2% compared with April 2022, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.
The index’s 10-city and 20-city composites – measuring home prices in the top 20 largest U.S. metros – gained 1.0% and 0.9%, month over month, but were down 1.2% and 1.7%, year-over-year, respectively.
Miami, Chicago, and Atlanta reported the highest year-over-year gains among the 20 cities. Miami held the top spot again with a 5.2% year-over-year price increase, while Chicago broke into the top three in second with a 4.1% increase, and Atlanta reclaiming third over Charlotte with a 3.5% increase.
“The U.S. housing market continued to strengthen in April,” says Craig J. Lazzara, managing director at S&P DJI, in a statement “Home prices peaked in June 2022, declined until January 2023, and then began to recover.”
“The ongoing recovery in home prices is broadly based,” Lazzara says. “Before seasonal adjustments, prices rose in all 20 cities in April – as they had also done in March. Seasonally adjusted data showed rising prices in 19 cities in April – versus 14 in March.
“If I were trying to make a case that the decline in home prices that began in June 2022 had definitively ended in January 2023, April’s data would bolster my argument,” Lazzara adds. “Whether we see further support for that view in coming months will depend on the how well the market navigates the challenges posed by current mortgage rates and the continuing possibility of economic weakness.”
Selma Hepp, chief economist at CoreLogic, says the year-over-year decline was the first the index had seen since 2012. However, she notes that the month-over-month gain indicates that home prices are still holding strong.
“From the month before, home prices showed another strong gain, up another 1.3 percent (on an unadjusted basis) which suggests that home buying conditions and home prices are heating up in many markets again,” Hepp says in a statement. “In addition, price gains among high tier homes are once again showing a strong rebound. Also, some markets that were weak during the pandemic are now showing strong price gains across price tiers, particularly Boston.
“Accumulation of homeowner equity, which averages over $270,000 nationally and over $1 million in some high-cost areas, acts to supports home price appreciation particularly in in-migrating markets where baby bomber homeowners may be retiring to and given that about 50 percent of baby boomers owning their homes free and clear,” Hepp adds.
Mark Fleming, chief economist for First American, says the month-over-month gain in April is further evidence that higher mortgage rates don’t always necessarily impact home values – especially when inventory is so low.
“In today’s housing market, nominal house prices declined in the second half of 2022, but have since re-accelerated,” Fleming says in First American’s latest Real House Price Index. “Since the start of this rising mortgage rate era, house prices have increased by over 12 percent nationally. Nominal house prices need to adjust to the reality of higher mortgage rates to allow for the housing market to become more affordable and balanced, but a fundamental housing supply shortage is keeping a floor on how low house prices can go.”
Photo: Kostiantyn Li