Home prices in the United States increased 5.5% year-over-year in January, according to the latest data by CoreLogic. However, prices dropped by 0.2% on a month-over-month basis.
CoreLogic projected that home prices will decrease by 0.1% on a month-over-month basis from January to February this year, but will increase on a year-over-year basis by 3.1% from January 2023 to January 2024.
These are the states with the highest price increases, based on CoreLogic’s data:
- Florida (13.4%)
- Maine (11.5%)
- South Carolina (10.7%)
“While 2023 kicked off on a more optimistic note for the U.S. housing market, recent mortgage rate volatility highlights how much uncertainty remains,” Selma Hepp, CoreLogic’s chief economist, said in a statement. “Nevertheless, the continued shortage of for-sale homes is likely to keep price declines modest, which are projected to top out at 3% peak to trough.”
If you’re looking to lower your housing payments, you could consider refinancing your mortgage for a better rate. And if you’re interested in becoming a new homeowner, it can help to shop around for the right deals. Visit Credible to compare options from different lenders, without affecting your credit score.
MORTGAGE RATES KEEP RISING BUT BUYERS CAN STILL FIND VALUE IN SHOPPING: FREDDIE MAC
Mortgage rates are on the rise
While lower mortgage rates led some experts to predict a housing market rebound at the beginning of the year, the tide seems to have shifted.
The average rates for a 30-year fixed-rate mortgage increased through February and into March, according to Freddie Mac data.
But there’s evidence that housing prices have been uncharacteristically high for some time. In fact, only 21% of U.S. homes for sale in 2022 were affordable for the typical household, according to a report from Redfin. That’s a drop from 40% in 2021 and the lowest rate on record, the report said.
“Housing affordability is at the lowest level in history, which will widen the wealth gap—especially between millennials,” Redfin Deputy Chief Economist Taylor Marr said in a statement. “Many millennials were able to buy their first home before or during the pandemic homebuying boom, but many others were priced out of homeownership and forced to keep renting.
“That means a lot of young adults missed out on a major wealth building opportunity: the value of homes owned by millennials has risen nearly 30% in the past year,” Marr added.
If you’re interested in lowering your monthly mortgage payments or becoming a new homeowner, you could consider shopping around for a loan that meets your needs. Visit Credible to get your personalized rate, without affecting your credit score.
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States, metros where home prices declined
The 5.5% annual increase in home prices was down for the ninth consecutive month and was the lowest recorded increase since June 2020, CoreLogic said in its report.
The Western U.S. saw some of the most notable price declines, along with other states and metro areas that had experienced major growth in recent years, the report said.
“Three Northwestern states (along with Washington, D.C.) posted at least slight annual declines as migration patterns that began during the pandemic shifted, slowing demand and driving price decreases,” CoreLogic said in its report.
Those states, which saw declining home prices year-over-year in December, were:
- Idaho
- Montana
- Washington
- Washington, D.C.
Meanwhile, CoreLogic found other areas at “very high risk” of seeing home price declines in the next 12 months. Those areas were:
- Bellingham, Washington
- Bremerton-Silverdale, Washington
- Crestview-Fort Walton Beach- Destin, Florida
- Salem, Oregon
- Tacoma-Lakewood, Washington
“Home price depreciation and strong income growth are expected to boost affordability, which is particularly important for first-time buyers,” Hepp said. “This group has accounted for a higher share of mortgage applications since last summer, as first-time buyers don’t need to surrender an extremely low mortgage rate like current homeowners.”
If you’re looking to become a homeowner, it can benefit you to shop around and compare your options. Visit Credible to speak with a homebuying expert and get your questions answered.
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