Rising Mortgage Rates Dampen Demand as Home-Price Growth FallsBy RISMedia Staff
The effect of rising mortgage rates on housing demand in 2022 became even more evident in December, with annual home price growth dipping to 6.9%, according to a new report from CoreLogic.
CoreLogic’s Home Price Index for December found that the current growth metric was well below the series high of 20% appreciation in April. On a month-over-month basis, the report found that home prices declined by 0.4% compared to November 2022. In addition, only nine states registered double-digit year-over-year price increases, compared with 48 that posted double-digit gains in April. Key highlights:
“While the national unemployment rate remained at a low 3.5% in December, according to the U.S. Bureau of Labor Statistics, layoffs may be affecting housing demand in some expensive metro areas, particularly those that rely heavily on the tech industry,” said the author of the report. “As noted in the latest U.S. CoreLogic S&P Case-Shiller Index, San Francisco and Seattle posted significant home price deceleration in November. Idaho was the only state to register an annual home price loss in December (-1%), compared with its 17% gain recorded in April 2022. Nevertheless, the pandemic-induced migration to suburban, exurban and rural areas may be winding down, as part of the U.S. workforce gradually returns to offices.” Selma Hepp, chief economist at CoreLogic, said that “The continued slowing of home prices at the end of 2022 reflects weaker housing market demand, primarily caused by higher mortgage rates and a more pessimistic economic outlook in general. But while prices continued to fall from November, the rate of decline was lower than that seen in the summer and still adds up to only a 3% cumulative drop in prices since last spring’s peak.” “Some exurban regions that became increasingly popular during the COVID-19 pandemic saw prices jump and affordability erode at the time, but these areas are now seeing major corrections,” Hepp continued. “And while price deceleration will likely persist into the spring of 2023, when the market will probably see some year-over-year declines, the recent decrease in mortgage rates has stimulated buyer demand and could result in a more optimistic homebuying season than many expected.” For the full report, click here. |
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