U.S. home prices posted their highest yearly rate of appreciation since January 2023, reaching 5.5% year over year in December, according to CoreLogic’s Home Price Index.
Home prices declined by 0.1% compared to November 2023. Price appreciation slowed greatly over the past year to 3.9%, down from 14.5% in 2022, but is in line with the pre-pandemic rate of 3.9% in 2019.
The data provider forecasts that home prices will decline by 0.2% between December 2023 and January 2024, with an increase of 2.8% between December 2023 and December 2024.
Northeast and Southern states posted the largest annualized gains in December. No states posted a year-over-year decline, a first since late 2022.
The resilient job market continues to buoy mortgage demand, although the inventory of homes for sale remains slim.
“The 2024 homebuying season should enjoy a boost because of pent-up demand, as well as a robust job market and wage growth,” Selma Hepp, chief economist for CoreLogic, said in a statement. “Geographic patterns in price gains continued to favor housing markets in the Northeast and the South, especially those that remain more affordable and have lagged in home price increases over the past couple of years.
“Last winter’s mortgage rate surge impacted seasonal home price changes in many markets and suggests that annual gains may have reached the cycle peak and will level off in the coming months.”
Hepp added that while appreciation is projected to slow, home prices will continue to rise as the spring homebuying season approaches. She doesn’t expect significant mortgage rate declines until the second half of the year.
Where are prices likely to fall?
Rhode Island, New Jersey and Connecticut posted the biggest price increases for the year ending in December, with double-digit appreciation rates of 13.3%, 11.3% and 10.5%, respectively.
CoreLogic’s Market Risk Indicator measures the metro areas that have the highest risk of price declines over the next year. These include Atlanta; Spokane, Washington; and the Florida metros of West Palm Beach, Tampa and Deltona.