In March 2023, the yearly increase in home prices declined to 3.1%, marking the slowest rate of growth since spring 2012. Nevertheless, the trend of growth persisted and has been on the rise for 134 consecutive months.
CoreLogic reported that annual home price growth decreased significantly in 10 states, primarily located in the western part of the country. This pattern reflects the persistent lack of affordability and insufficient inventory in the area. Furthermore, there is a decreasing demand for higher-priced homes compared to those with median prices, leading to a faster decline in appreciation for such properties in the region.
Due to factors such as inflation, a sluggish job market, and the prediction of an impending economic downturn, prospective homebuyers remain hesitant. Additionally, with mortgage interest rates remaining around 5.5%, many continue to refrain from entering the housing market. In light of these circumstances, CoreLogic predicts that the annual growth of home prices in the United States will likely continue to decrease throughout the spring and early summer, before eventually picking up later in 2023.
Selma Hepp, the Chief Economist at CoreLogic, stated that despite the fluctuating conditions in housing markets throughout the nation, prices in several major metropolitan areas have shown signs of improvement. The United States experienced a second consecutive month of gains, with a month-over-month increase of 1.6%, which is twice the average rate observed between 2015 and 2020.
Hepp went on to explain that the recent upswing in home prices indicates a shortage of available properties in the current housing market. Furthermore, although the general issue of affordability often negatively impacts home price growth, the ability to work remotely and the resulting increase in mobility seem to be contributing to rising home prices in certain regions of the country.