U.S. home prices increased 0.4% in December compared with November — the smallest month-over-month increase since June — according to Redfin.
December represented the third straight month of slowing price growth.
On a year-over-year basis, prices rose 6.6%.
“Many home purchases that closed in December were negotiated in November, when mortgage rates were near the highest level in over two decades,” says Sheharyar Bokhari, senior economist for Redfin, in a release. “That likely depressed home price growth because buyers were grappling with limited purchasing power.”
Home price growth also likely slowed in December because the housing shortage eased slightly, giving buyers more options to choose from; new listings increased 0.1% to the highest seasonally adjusted level since September 2022.
Still, housing supply remained far below pre-pandemic levels, preventing home prices from dropping as buyers compete for a limited pool of homes.
“Overall, homebuying conditions have been improving,” Bokhari says. “Price growth is slowing, supply is on the rise and mortgage rates have fallen significantly since their October peak. Price growth also appears to be normalizing as the housing market becomes more balanced; the 0.4 percent gain in December is roughly in line with monthly increases that occurred the years leading up to the pandemic.”
Photo: Tierra Mallorca