The acceleration of price gains for single-family homes held firm in February, but there were some positive signs of a modest bounce-back in some areas of the latest S&P Case-Shiller Index.
The February index posted a 2% annual price gain for single-family homes, down from 3.7% in the previous month. However, the index also showed that the National Composite and the 10-City and 20-City marked their first increases in months since the market rebalances kicked off late last year.
The national index showed a 0.2% gain from the month before, while the 10-City and 20-City Composites posted increases of 0.1% after seasonal adjustments. According to the report, eight of the 20 metros analyzed reported lower prices in February.
Despite the month-to-month improvements, the 10- and 20-City indexes showed yearly decelerating price growth. The 10-City Composite annual increase came in at 0.4%, down from 2.5% in the previous month, while the 20-City index posted a 0.4% year-over-year gain, down from 2.6% in January.
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 December, climbing 10.8%, 2.2% and 6.6%, respectively.
The complete data for the 20 markets measured by S&P:
Atlanta, Georgia
February/January: 0.4%
Year-Over-Year: 6.6%
Boston, Massachusetts
February/January: 0.1%
Year-Over-Year: 2.2%
Charlotte, North Carolina
February/January: 0%
Year-Over-Year: 6%
Chicago, Illinois
February/January: 0%
Year-Over-Year: 3.6%
Cleveland, Ohio
February/January: 0%
Year-Over-Year: 3.9%
Dallas, Texas
February/January: 0%
Year-Over-Year: 2%
Denver, Colorado
February/January: 0.8%
Year-Over-Year: -1.2%
Detroit, Michigan
February/January: -0.2%
Year-Over-Year: 1.6%
Las Vegas, Nevada
February/January: -0.9%
Year-Over-Year: -2.6%
Los Angeles, California
February/January: 1%
Year-Over-Year: -1.3%
Miami, Florida
February/January: -0.4%
Year-Over-Year: 10.8%
Minneapolis, Minnesota
February/January: -0.1%
Year-Over-Year: 0.5%
New York, New York
February/January: -0.3%
Year-Over-Year: 3.6%
Phoenix, Arizona
February/January: 0.1%
Year-Over-Year: -2.1%
Portland, Oregon
February/January: -0.1%
Year-Over-Year: -3.2%
San Diego, California
February/January: 1.5%
Year-Over-Year: -4.1%
San Francisco, California
February/January: 1%
Year-Over-Year: -10%
Seattle, Washington
February/January: -0.3%
Year-Over-Year: -9.3%
Tampa, Florida
February/January: 0.1%
Year-Over-Year: 7.7%
Washington, D.C.
February/January: 0.4%
Year-Over-Year: 1.1%
The takeaway:
“Home price trends moderated in February 2023,” says Craig J. Lazzara, managing director at S&P DJI. “The National Composite, which had declined for seven consecutive months, rose a modest 0.2% in February and now stands 4.9% below its June 2022 peak.
“The moderation we observed nationally is also apparent at a more granular level. Before seasonal adjustment, prices rose in 12 cities in February (versus in only one in January). Seasonally adjusted data showed nine cities with rising prices in February (versus five in January). With or without seasonal adjustment, most cities’ February results showed improvement relative to their January counterparts.
“The results released today pre-date the disruptions in the commercial banking industry, which began in early March. Although forecasts are mixed, so far, the Federal Reserve seems focused on its inflation-reduction targets, which suggests that interest rates may remain elevated, at least in the near term. Mortgage financing and the prospect of economic weakness are, therefore, likely to remain a headwind for housing prices for at least the next several months,” Lazzara concluded.
“When there are reports of home prices falling, many people immediately think about the 2008 financial crisis when millions of homeowners ended up in foreclosure, and home prices fell 30%-plus, but 2023 is very different from 2008,” said Dr. Lisa Sturtevant, chief economist at Bright MLS. “The economy is in a much better place, with unemployment at a 50-year low. Inventory is limited, and there is still too little new construction to meet demand. The mortgage market is much tighter, with very little subprime lending and lending requirements stricter. And homeowners have accumulated record levels of housing equity, which provides them a cushion.
“The places most at risk of price declines are those where there was an exceptional run-up in home prices during the pandemic. Second home and vacation markets, ‘Zoom Towns’ at the fringes of urban markets, markets impacted by tech sector declines and places where housing affordability is the worst are where we should expect home prices to fall further. Many of these markets are on the West Coast. By contrast, homes in the Midwest, Mid-Atlantic and Southeast regions of the country are still by and large experiencing price growth,” Sturtevant concluded.
“Today’s S&P CoreLogic Case-Shiller Index confirmed reports of decelerating prices continuing into 2023,” said Danielle Hale, chief economist at realtor.com®. “The indices track price figures for the months of December, January and February, a period that included some of the lowest readings on existing-home sales in more than 12 years, followed by a notable bounce back in February. In this period, mortgage rates fell from November’s highs above 7% to just above 6%, a low not seen since September, before rebounding a bit.
“February home sales data suggest that a good number of buyers who had been sitting on the sidelines took advantage of this reprieve in mortgage rates, and this helped propel prices up for the month (0.2% – 0.3% for the national and composite indices) on a seasonally adjusted basis.
“Real estate has always been local, but as the buyers and sellers adjust to higher mortgage rates and lower affordability, regional trends have diverged sharply. This makes it more important than ever for buyers and sellers to tap into timely, local real estate data and conditions when evaluating housing-related decisions,” Hale concluded.
