Housing Market Update: Positive Annual Appreciation, Western States Face Downturn
- U.S. house prices increased by 4.3% between Q1 2022 and 2023.
- Western states experience first-time decline in year-over-year house prices.
- South Carolina, North Carolina, and Maine see highest annual appreciation.
According to the Federal Housing Finance Agency (FHFA) House Price Index (FHFA HPI®), U.S. house prices increased by 4.3 percent between the first quarters of 2022 and 2023. Compared to the fourth quarter of 2022, house prices were up by 0.5 percent. In March, FHFA’s seasonally adjusted monthly index rose by 0.6 percent compared to February.
Dr. Anju Vajja, Principal Associate Director in FHFA’s Division of Research and Statistics, stated that U.S. house prices generally saw modest increases in the first quarter. However, year-over-year prices in many western states have started to decline for the first time in over ten years.
Key findings include:
The U.S. housing market has experienced positive annual appreciation each quarter since 2012.
House prices increased in 43 states between the first quarters of 2022 and 2023. The top five areas with the highest annual appreciation were South Carolina (9.5 percent), North Carolina (9.4 percent), Maine (8.9 percent), Vermont (8.8 percent), and Arkansas (8.8 percent). The areas with the highest annual depreciation were Utah (-4.3 percent), Nevada (-3.6 percent), California (-2.9 percent), Washington (-2.6 percent), and the District of Columbia (-2.3 percent).
Among the top 100 largest metropolitan areas, house prices rose in 78 of them over the last four quarters. The greatest annual price increase was observed in Miami-Miami Beach-Kendall, FL (14.1 percent). Meanwhile San Francisco-San Mateo-Redwood City, CA (MSAD) experienced the largest price decline (-10.1 percent).
Among the seven census divisions with positive house price changes, the South Atlantic division recorded the strongest four-quarter appreciation, with a 7.2 percent increase between the first quarters of 2022 and 2023. House prices depreciated in two census divisions, with a 2.4 percent annual decrease in the Pacific division and a 0.1 percent decrease in the Mountain division.
S&P CoreLogic Case-Shiller 20-city Home Price Index
In March, the S&P CoreLogic Case-Shiller 20-city home price index rose by 0.5% compared to the previous month, driven by limited housing supply. Despite higher mortgage rates, the housing market experienced an upward trend. However, the rising rates could impact home sales.
On a yearly basis, home price appreciation declined by 1.1%. Cities in the Southeast saw the highest growth, while those on the West Coast showed weak price increases.
The housing market faces challenges due to low supply, as sellers are hesitant to list their properties. Efforts are being made to address supply and demand issues. The housing price decline may have halted, but mortgage rates and potential economic weakness could continue affecting prices in the coming months.