Prices of homes in the U.S. are continuing the steady monthly rise that has been the uninterrupted pattern for over 11 years, but the annual rate of growth slowed to 3.1% in March 2023 compared to March 2022 – the lowest since spring 2012.
March home prices reflected a 1.6% increase from February 2023 – a level which CoreLogic chief economist Selma Hepp said was twice the average seen between 2015 and 2020.
One segment of the market that appears to be seeing even faster appreciation is attached homes. The report found that the 4.6% annual appreciation of attached properties was 2.1 percentage points higher than the 2.5% increase for detached properties.
But in 10 states, mostly in the West, home prices actually dropped in March from one year earlier. This “partially reflects the region’s lack of affordability and continued inventory shortages,” according to the CoreLogic Home Price Index. It found demand for higher-priced homes in this area is slowing more than for median-priced homes, leading to an even faster rate of depreciation.
CoreLogic said home buyers are still holding back because of inflation, slowing job gains and wage growth, a potential recession and rising interest rates. The Fed’s announcement on Wednesday of another quarter-percent increase in interest rates to above 5% for the first time since 2007, will not have helped.
Nevertheless, before the Fed announcement, CoreLogic predicted that after a continuing spring and summer decline in price growth, it would pick up later this year, rising to an annual rate of 4.6% by March 2024.
“The monthly rebound in home prices underscores the lack of inventory in this housing cycle,” Hepp said. “In addition, while the lack of affordability generally weighs on home price growth, mobility resulting from remote working conditions appears to be a current driver of home prices in some areas of the country.”
Of the 20 metro areas CoreLogic tracks, Miami showed the highest price gains at 14.8%, while homes in second-place Tampa increased 6.9%.
Vermont, Indiana and Florida led the states in annual price gains. However, 10 states, mostly in the West, showed annual losses: Washington, Idaho, Nevada, Utah, California, Montana, Oregon, Colorado, Arizona. The only other state with an annual loss was New York.