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Increased Cost of Homeownership Dampening Buyer Demand

CoreLogic has released the CoreLogic Home Price Index (HPI) and HPI Forecast for August 2022, showing home prices nationwide —including distressed sales— increased year-over-year by 13.5%; the lowest year-over-year appreciation recorded since April 2021, partially reflecting cooling buyer demand due to higher mortgage rates and housing trends prompted by the COVID-19 slowdown.

Although U.S. home prices continued their 127-month run of consecutive annual gains in August, they slowed for the fourth straight month to 13.5%. The 0.7% month-over-month price decrease also indicates reduced homebuyer enthusiasm, with nearly three-quarters of states posting declines from July.

“The increased cost of homeownership has dampened buyer demand and caused prices to decelerate at a faster pace than initially expected,” said Selma Hepp, interim lead of the Office of the Chief Economist at CoreLogic. “Housing markets on the West Coast and in the Mountain West, as well as second-home markets, recorded particularly strong price growth in the summer of 2021 but were the first to see month-over-month price declines during the same period this year."

Highlights:

  • U.S. home prices (including distressed sales) increased 13.5% year-over-year in August 2022 compared to August 2021.
  • On a month-over-month basis, home prices declined by 0.7% compared to July 2022.
  • In August, annual appreciation of detached properties (13.7%) was 0.9 percentage points higher than that of attached properties (12.8%).
  • Annual U.S. home price gains are forecast to slow to 3.2% by August 2023.
  • Miami posted the highest year-over-year home price increase of the country’s 20 largest metro areas in August, at 27.1%, while Tampa, Florida dropped to the second spot at 26.9%.
  • Hurricane Ian’s impact on Tampa’s housing market and other parts of Florida could cause price growth there to relax even more than the projected U.S. slowdown.
  • Florida and Tennessee posted the highest home price gains, 26.4% and 20%, respectively.
  • North Carolina ranked third with a near 20% year-over-year increase. Washington, D.C. ranked last for appreciation at 2.4%.

"While decelerating price growth and price declines benefit younger potential homebuyers, mortgage rates that are approaching 7% may cut many hopefuls out of the picture,” Hepp concluded.

The next CoreLogic HPI press release, featuring September 2022 data, will be issued on November 1, 2022, at 8 a.m. ET.

To read the full CoreLogic HPI and HPI Forecast, including more charts and methodology, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport, with more than six years of writing experience. She has served as Editor-in-Chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington. She has covered events such as the Byron Nelson, Pac-12 Conferences, the Women in Dallas Film Festival, to freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, she is an avid jazz lover and reader. She can be reached at [email protected]
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