By Manuel Gutierrez, Consulting Economist to NKBA
According to the Case-Shiller Home Price Index, home prices continued trending downwards in January. Nationally, house prices fell by 0.55 percent, the seventh consecutive monthly drop. The price index for the combined 20 metro areas also fell by a similar amount, down by 0.58 percent.
- Year over year, home prices for January were still higher than a year earlier, up by 3.8 percent. However, this was a smaller price appreciation than the 5.6 percent for home prices seen in December. Also, house price inflation came down from the 19 percent to 21 percent range maintained in the twelve months ending in June of last year.
- The national increase in house prices over the previous twelve months reflects vastly different trends occurring across the nation’s metro areas. For the 20 metropolitan areas tracked by the index, those with the largest increases were in the Eastern side of the U.S. The city of Miami saw a gain of 13.8 percent — though this growth was significantly lower than the nearly 30 percent increase seen in the twelve months ending in January 2022, a year earlier. Tampa and Atlanta prices were, respectively, 10.5 percent and 8.5 percent higher.
- In contrast, major metros in the West continued to see a decline in house prices relative to January 2022. San Francisco saw the biggest drop, with the sale price down by 7.6 percent. Seattle prices were 5.1 percent down, and in San Diego the drop was a more modest 1.4 percent. In Portland, prices dropped by 0.5 percent.
- Condominium prices were down in two of the five metro areas tracked by the index. Prices in January for San Francisco condominiums were 1.0 percent lower than in the previous month, and 5.7 percent lower than in the previous year. Seattle, the other metro area with lower condominium prices in January, saw decreases of 1.5 percent month-over-month and 5.1 percent year-over-year.
- Falling house prices should improve housing affordability, enabling more households to purchase a home. At the same time, since houses represent approximately half of households’ wealth, a decline in prices impacts consumer wealth negatively and is likely to reduce consumer spending for home remodeling.