U.S. home prices continued to rise in December, but the rate of appreciation continued to slow.
Prices increased just 0.1%, on average, compared with November, and were up 5.5% compared with December 2022, according to CoreLogic.
CoreLogic notes that the stellar job growth of the past several months is one factor keeping home prices elevated – along with limited inventory and strong demand from first-time homebuyers.
As noted in the firm’s most recent Loan Performance Index report, a healthy job market continues to drive mortgage performance and housing demand. In January, the country added 353,000 new jobs, according to the U.S. Bureau of Labor Statistics. These economic and housing market dynamics are happening while the inventory of homes for sale remains slim.
“Last winter’s mortgage rate surge impacted seasonal home price changes in many markets and suggests that annual gains may have reached the cycle peak and will level off in the coming months,” says Selma Hepp, chief economist for CoreLogic, in a statement. “But while appreciation is projected to slow, home prices will continue to extend to new highs entering the typically busy spring homebuying season. Also, while the recent dip in mortgage rates help improve some affordability challenges, additional rate declines may not arrive until the second half of 2024.
“The 2024 homebuying season should enjoy a boost because of pent-up demand, as well as a robust job market and wage growth,” Hepp adds. “Geographic patterns in price gains continued to favor housing markets in the Northeast and the South, especially those that remain more affordable and have lagged in home price increases over the past couple of years.”
In December, the annual appreciation of detached properties (5.7%) was 1.1 percentage point higher than that of attached properties (4.6%).
Miami posted the highest year-over-year home price increase of the country’s 20 tracked metro areas in December, at 10.7%. It was followed by Detroit at 9.3% and San Diego at 8.1%.
Among the states, Rhode Island ranked first for annual appreciation in December at 13.3%, followed by New Jersey at 11.3% and Connecticut at 10.5%.
No states recorded year-over-year home price losses.
In 2023, the average gain was 3.9%, down substantially from 14.5% in 2022 but the same as the annual average in 2019.
Northeastern states continued to lead the U.S. for annual price gains, with Rhode Island on top at 13.3%.
Among large metro areas, Miami returned to the No 1. spot for year-over-year home price increases in December, posting a gain of almost 11%.
CoreLogic’s forecast shows annual U.S. home price gains slowing to 2.8% by December 2024.
Photo: Bikram Sharma