By spring 2023 home price growth will sink below year-ago levels

Annual home price movements could move into negative territory by next spring, but then turn around and post year-over-year growth of 4.1% through October 2023, the latest CoreLogic Home Price Index report found.

Values grew 10.1% on an annual basis through October but dropped a slight 0.1% from September, the fourth consecutive month-to-month decline. However, that is slower than the decline between August and September of 0.5%.

The CoreLogic HPI is a different metric than the S&P CoreLogic Case-Shiller index, which measures prices in 20 large cities; this fell 1.2% in September compared with August.

“Home price growth continued to approach single digits in October, and it will move in that direction for the rest of the year and into 2023,” said Selma Happ, interim lead of the Office of the Chief Economist at CoreLogic. “However, while some housing markets have seen significant recalibration since the spring price peak and are likely to post losses in 2023, further deteriorating for-sale inventory, some relief in mortgage rate increases and relatively positive economic news may help eventually stabilize home prices.”

Mortgage rates have dropped considerably in the past month. The 30-year conforming mortgage peaked at 7.15% on Nov. 6, according to information from Black Knight Optimal Blue.  For Dec. 5, it averaged 6.37%.

Economic uncertainty, the loss of homebuyer purchase power because of rising interest rates and continued low inventory — now due to seller preferences to keep affordable mortgage rates — have all contributed to slowing home appreciation.

“Annual U.S. price growth is expected to taper off in the coming months, perhaps moving into negative territory by spring 2023, but then slowly ticking back into single digits as the year progresses,” a blog on the CoreLogic website said.

Besides the 4.1% prediction for annual growth, CoreLogic is forecasting that prices will be flat between October and November.