In January, the U.S. median home selling price slipped 2 percent from December, according to the S&P CoreLogic Case-Shiller National Home Price Index.
The index did not give dollar amounts.
However, according to the National Association of Realtors (NAR), the median price in January was $359,000, compared to $366,900 in December, slightly more than a 2-percent reduction.
January marked the seventh consecutive month of price declines, the longest such slide since 2012, The Wall Street Journal reported. The number of homes sold has fallen every month since January 2022, the NAR said.
Still, the index’s median price rose 3.8 in January, year over year. However, that registered the smallest annual gain since December 2019. In December 2022, the annual price increased 5.8 percent from a year earlier.
Rising mortgage rates have hobbled home sales, forcing sellers to cut prices.
The average U.S. interest rate on a 30-year, fixed-rate mortgage was 3.22 percent in January 2022. By October, it had reached 7.08 percent.
The rate has varied so far this year and was 6.88 percent on 3 April.
Home prices fell fastest in the West, with Seattle’s average down 1.5 percent and closing prices off 1.1 percent in Las Vegas, the index showed.
San Francisco was the weakest market in the country, with prices slumping 7.6 percent in the last 12 months.
During the COVID War, home prices in the West were bid up more than in other areas as suddenly liberated remote workers moved to areas with lower taxes and more space per housing dollar.
As that happened, home prices in the eastern U.S. dove.
Now, higher interest rates are adding hundreds of dollars to monthly mortgage payments, compared to a year ago, as we reported in “Average Mortgage Interest Rate Tops 7 Percent” (7 Mar 2023).
Those higher payments make lower-priced houses in the East seem like bargains. Home prices in Eastern metro areas are posting year-over-year price increases.
In Miami, the average home price has grown 13.8 percent; in Tampa, the premium is 10.5 percent.
TREND FORECAST: As we noted in the article cited above, home prices will continue to decline but—minus a wildcard event such as a nuclear war—we do not forecast a housing crash.
Builders are having trouble finding land on which to build new houses. Higher interest rates are shutting more and more buyers out of home ownership. The number of houses for sale is increasing but still low, keeping home prices high. Homeowners are reluctant to sell, knowing their home values have fallen in recent months—and knowing that they will pay a premium price to buy or rent a new home.
The housing market will not free up until mortgage rates fall significantly, homeowners acknowledge reality and agree to sell their homes at market prices, and home prices descend from 2022’s unrealistic heights to permit more buyers to realize their dream of home ownership.
TRENDPOST: Again, the formula is simple: The higher interest rates rise, the deeper the economy falls.
With interest rates up in the EU and borrowing costs higher, Eurostat reported today that house prices fell 1.5 percent in the last quarter of 2022… registering the bloc’s first quarterly fall since 2015.