For the first time in 11 years, a monthly measure of housing prices showed a year-over-year decrease in April 2023. The data released Tuesday showed that the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index dropped 0.2% compared to a year earlier.
The index is a composite of single-family home prices for major markets throughout the U.S. The index has seen a major correction after prices went up by over 18% in 2021 and 10% in 2020.
The index, however, has noted small increases over the last three months after housing prices dropped for the last half of 2022.
"Home prices peaked in June 2022, declined until January 2023, and then began to recover," said Craig J. Lazzara, managing director at S&P DJI. "The National Composite rose by 1.3% in April (repeating March's performance), and now stands only 2.4% below its June 2022 peak. Our 10- and 20-City Composites both gained 1.7% in April."
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Whether housing prices resume a more normal, modest trend of price increases remains to be seen. Much of it could depend on future decisions by the Federal Reserve regarding interest rates, which remain at a nearly 15-year high.
The rates have remained high to combat high inflation, which also peaked in June at 9.2%. It has since returned to a more modest 4%, closer to the Fed's goal of 2%.
"If I were trying to make a case that the decline in home prices that began in June 2022 had definitively ended in January 2023, April's data would bolster my argument," Lazzara said. Whether we see further support for that view in coming months will depend on how well the market navigates the challenges posed by current mortgage rates and the continuing possibility of economic weakness."
Lazzara called regional differences in pricing "striking." While housing prices saw modest bumps in the East and South, cities in the Mountain and Pacific time zones had major declines.
The report noted a 12.4% drop in home prices in Seattle, and San Francisco had an 11.1% decline.
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