The CoreLogic Home Price Index (HPI) and HPI Forecast for January 2023 show that U.S. home prices continued their gradual fall, with the 5.5% annual gain down for the ninth straight month and the lowest recorded since June 2020.
Deceleration was particularly noticeable in the Western U.S. and other states and metro areas that saw substantial appreciation over the past few years. Three Northwestern states (along with Washington, D.C.) posted at least slight annual declines as migration patterns that began during the pandemic shifted, slowing demand and driving price decreases.
“While 2023 kicked off on a more optimistic note for the U.S. housing market, recent mortgage rate volatility highlights how much uncertainty remains,” says Selma Hepp, chief economist at CoreLogic. “Nevertheless, the continued shortage of for-sale homes is likely to keep price declines modest, which are projected to top out at 3 percent peak to trough.”
“Home price depreciation and strong income growth are expected to boost affordability, which is particularly important for first-time buyers,” Hepp continues. “This group has accounted for a higher share of mortgage applications since last summer, as first-time buyers don’t need to surrender an extremely low mortgage rate like current homeowners.”
U.S. home prices (including distressed sales) increased by 5.5% year over year in January 2023 compared to January 2022. On a month-over-month basis, home prices declined by 0.2% compared to December 2022.
In January, the annual appreciation of attached properties (6.5%) was 1.3 percentage points higher than that of detached properties (5.2%).
CoreLogic forecasts show annual U.S. home price gains slowing to 3.1% by January 2024.
Miami posted the highest year-over-year home price increase of the country’s 20 largest metro areas in January, at 17.3%, while Tampa, Fla., continued to rank second at 11.7%.
Florida and Maine recorded the highest annual home price gains, 13.4% and 11.5%, respectively. South Carolina posted the third-highest gain, with a 10.7% year-over-year increase. Three states and one district registered year-over-year price declines: Idaho (-2.3%), Washington (-2.2%), Montana (-0.6%) and Washington, D.C. (-0.1%).