‘Mortgage Financing Remains a Headwind for Home Prices’: Home-Price Growth Slows in December, With San Francisco Leading the Way
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The numbers: The S&P CoreLogic Case-Shiller 20-city house price index rise fell 0.5% in December, its sixth monthly decline.
Year-over-year appreciation was still up 4.6%, but has slowed down from a 6.8% annual increase in the previous month.
A broader measure of home prices, the national index, fell a seasonally adjusted 0.3% in December, but was up 5.8% over the past year.
Key details: Miami, Tampa and Atlanta reported the highest year-over-year gains among the 20 cities in December.
San Francisco, Seattle and Portland reported the lowest year-over-year gains. San Francisco has seen home-price growth fall by 4.2% from last December.
Here’s the full list of 20 cities and their home prices:
| Cities | Change from last year |
| Atlanta | 10.4% |
| Boston | 5.2% |
| Charlotte | 9.9% |
| Chicago | 5.9% |
| Cleveland | 6% |
| Dallas | 7.9% |
| Denver | 3.5% |
| Detroit | 4.5% |
| Las Vegas | 3.6% |
| Los Angeles | 2.7% |
| Miami | 15.9% |
| Minneapolis | 3.2% |
| New York | 6.6% |
| Phoenix | 2.9% |
| Portland | 1.1% |
| San Diego | 1.6% |
| San Francisco | -4.2% |
| Seattle | -1.8% |
| Tampa | 13.9% |
| Washington | 4.3% |
| Composite-20 | 4.6% |
A separate report from the Federal Housing Finance Agency showed home prices falling in December, down 0.1% from the prior month.
And over the last year, the FHFA index was up 8.4%.
Big picture: Home prices reflect the major slowdown the interest rate-sensitive housing sector went through at the end of last year.
And with mortgage rates back up, housing sales are poised to take a hit, meaning that home prices will likely continue this downward slide in the coming months.
What S&P said: “The prospect of stable, or higher, interest rates means that mortgage financing remains a headwind for home prices, while economic weakness, including the possibility of a recession, may also constrain potential buyers,” Craig J. Lazzara, managing director at S&P DJI, said.
“Given these prospects for a challenging macroeconomic environment, home prices may well continue to weaken,” he added.
What are they saying? “Home prices continued to recede modestly in December, largely in line with expectations,” Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets, wrote in a note.
“After surging by roughly 40% over the two years from the spring of 2020 to the spring of 2022, home prices gave back a sliver of that appreciation in the second half of last year. We may be in for more of the same for at least the first part of 2023, but when all is said and done, I believe that the retracement will be a fraction of the pandemic era run-up,” he added.
Market reaction: The Dow Jones Industrial Average and the S&P 500 were mixed in early trading on Tuesday. The yield on the 10-year Treasury note rose above 3.96%.
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