The challenges of a shifting housing market and mortgage environment continued to have a cooling effect on home price growth last month. Recent data from the leading index on home costs tallied the fifth consecutive month of declines in November.
The S&P Case-Shiller Index showed a 7.7% annual price gain for single-family homes nationwide—down from a 9.2% YoY increase in October. The National Composite Index fell 0.6% for the month, which experts note marks a 3.6% decline since the market peaked in June 2022.
All 20 cities showed monthly price declines in November, marking a median decrease of 0.8%. Annually, the 10-City Composite showed a 6.3% increase in November, while the 20-City Composite posted a 6.8% YoY gain.
Both composites saw decelerating growth compared to the same period last year.
Miami, Tampa and Atlanta reported the highest YoY gains among the 20 cities in October, climbing 18.4%, 16.9% and 12.7%, respectively.
The complete data for the 20 markets measured by S&P:
Atlanta, Georgia
November/October: -0.6%
Year-Over-Year: 12.7%
Boston, Massachusetts
November/October: -0.7%
Year-Over-Year: 6.9%
Charlotte, North Carolina
November/October: -0.7%
Year-Over-Year: 12.6%
Chicago, Illinois
November/October: -0.6%
Year-Over-Year: 7.7%
Cleveland, Ohio
November/October: -0.7%
Year-Over-Year: 7.5%
Dallas, Texas
November/October: -1.1%
Year-Over-Year: 10.9%
Denver, Colorado
November/October: -0.8%
Year-Over-Year: 6.1%
Detroit, Michigan
November/October: -0.4%
Year-Over-Year: 6.2%
Las Vegas, Nevada
November/October: -1.7%
Year-Over-Year: 6.6%
Los Angeles, California
November/October: -0.9%
Year-Over-Year: 4.4%
Miami, Florida
November/October: -0.2%
Year-Over-Year: 18.4%
Minneapolis, Minnesota
November/October: -0.7%
Year-Over-Year: 4.8%
New York, New York
November/October: -0.2%
Year-Over-Year: 8.1%
Phoenix, Arizona
November/October: -1.9%
Year-Over-Year: 6.3%
Portland, Oregon
November/October: -0.9%
Year-Over-Year: 3.9%
San Diego, California
November/October: -1.4%
Year-Over-Year: 4.8%
San Francisco, California
November/October: -1.6%
Year-Over-Year: -1.6%
Seattle, Washington
November/October: -1.5%
Year-Over-Year: 1.5%
Tampa, Florida
November/October: -1%
Year-Over-Year: 16.9%
Washington, D.C.
November/October: -0.3%
Year-Over-Year: 5.3%
The takeaway:
“November 2022 marked the fifth consecutive month of declining home prices in the U.S.,” says Craig J. Lazzara, managing director at S&P DJI in a statement. “For example, the National Composite Index fell -0.6% for the month, reflecting a -3.6% decline since the market peaked in June 2022. We saw comparable patterns in our 10- and 20-City Composites, both of which stand more than -5% below their June peaks. These declines, of course, came after very strong price increases in late 2021 and the first half of 2022. Despite its recent weakness, on a year-over-year basis, the National Composite gained 7.7%, which is in the 74th percentile of historical performance levels.
“As the Federal Reserve moves interest rates higher, mortgage financing continues to be a headwind for home prices. Economic weakness, including the possibility of a recession, would also constrain potential buyers. Given these prospects for a challenging macroeconomic environment, home prices may well continue to weaken,” Lazzara concluded.
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“The latest S&P CoreLogic Case-Shiller report provides evidence of the slowing housing market during the fall, with home prices continuing to decelerate in November,” said Dr. Lisa Sturtevant, chief economist at Bright MLS in a statement. “The index has now declined for five consecutive months.
“The home price data released today do not account for the full impact of rising mortgage rates, which were above 7% early in November and led to a significant pullback in buyer activity. In many local markets across the country, home prices have fallen precipitously from their summer peaks as buyers were forced out of the market due to affordability challenges.
“But despite the slowdown in price appreciation, talk about a major market correction is just hyperbole. In fact, we may have already seen the bottom of the housing market. Mortgage rates fell throughout January, prompting more buyers to view properties and make offers. Inflation has begun to ease, boosting consumer confidence. Many agents and brokers are expecting a robust spring housing market, and the overall mood in the market feels much more optimistic than even a month ago.
“Home shoppers are still going to find limited supply in the market, and affordability is still a major challenge, particularly for first-time homebuyers. Many existing homeowners are hesitant to sell when they have very favorable, sub-3% mortgage rates. The persistent lack of inventory, exacerbated by this ‘rate lock,’ is the main reason why we should expect prices to be stable or even rise in the year ahead,” Sturtevant concluded.
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“Today’s S&P CoreLogic Case-Shiller Index showcases the slowdown in housing transactions toward the tail end of 2022, as homebuyers worn tired by the relentless surge in mortgage rates took a bigger step back from the market,” said George Ratiu, manager of economic research at realtor.com®, in a statement. “The index tracks price figures from the months of September, October and November. Sales of existing homes in November declined, leaving more sellers to ponder their pricing strategies, especially as the start of the holiday season redirected people’s focus away from real estate.
“The drop in activity led to decelerating home prices, with the national index showing a much slower 7.7% yearly gain, down from 10.7% in October, and 20.6% from March 2022.
“November also saw the Freddie Mac 30-year fixed rate rise above 7% for the second time in 2022. Even though the rate fell in the second half of the month, buyers were squeezed by higher payments at a time when overall consumer prices continued rising.
“Markets have adjusted since November, with the number of homes for sale continuing to grow, properties spending longer on the market, and price growth moderating further. The demand-supply dynamics have placed buyers on a stronger footing at the start of 2023, providing them much-needed leverage at the negotiation table. Moreover, mortgage rates have been on a downward trend, moving closer to 6% at the close of January. However, buyers are not likely to see rates drop significantly lower in the next few weeks.
“Financial and real estate markets are keeping a close eye on this week’s meeting of the Federal Reserve Open Markets Committee, expecting a more moderate rate hike in light of the slowing inflation. However, the Fed is poised to continue pushing the funds rate higher during this year in order to bring inflation near the 2% target. For buyers and sellers, this signals additional adjustment in median prices in the months ahead.”
