Home prices cooling off slightly in Q4 of 2022.
In the fourth quarter of 2022, existing-home sales prices climbed in 166 out of 186 metro areas, approximately 90%. While this seems like an across-the-board gain, that is down from the 181 metro areas that saw home price increases in the third quarter.
In a report today by the National Association of Realtors® (NAR), national median single-family existing-home price came in at $378,700. This was a 4.0% increase from Q4 of 2021, but lower than last quarter, which came in at $398,500. This past quarter’s home prices represented a slowdown of year-over-year price appreciation from last quarter, when home prices grew at a 8.6% pace.
Rising mortgage rates are seen as a major reason for this slowdown in home price growth. National average mortgage rates were above 7% for the first time in decades during parts of the quarter, which surely had an effect on home prices.
A welcome slowdown
"A slowdown in home prices is underway and welcomed, particularly as the typical home price has risen 42% in the past three years," said Lawrence Yun, NAR Chief Economist. "Far fewer metro markets experienced double-digit price gains in the latest quarter."
Metro areas seeing double digit price gains:
- Q4 2021: 66%
- Q1 2022: 70%
- Q2 2022: 80%
- Q3 2022: 46%
- Q4 2022: 18%
Home prices grew in all four regions of the country last quarter, meaning that most owners’ homes are worth more than at this time last year. But the relatively modest increases could help potential homebuyers.
Median Home Prices, Q4 2022 vs. Q4 2021
- Northeast: up 5.3%
- Midwest: up 4.0%
- South: up 4.9%
- West: up 2.6%
This increase in home value can help current homeowners finance a home renovation project, with home equity lines of credit (HELOC) being a particularly useful tool to tap into the equity they’ve built up without changing the terms, and possibly rate, of their mortgage.
Help for housing affordability
Potential homebuyers have struggled over the last year with the double whammy of rising home prices and mortgage rates. But both of those trends are starting to reverse, with 11% of markets (20 of 186) experiencing home price declines in the fourth quarter of 2022 and mortgage rates dipping under 6% for the first time since the fall of 2022 recently.
Housing affordability remained an issue in the final three months of 2022, though the increase seems to be decelerating. At the end of 2022, the monthly mortgage payment on a typical single-family home with a 20% down payment was $1,969. This is a 7% increase from the third quarter of 2022 ($1,838), but a significant increase of 58% – or $720 – from the fourth quarter of 2021. But if mortgage rate and home price trends continue, those numbers will hopefully continue coming down.
“Even with a projected reduction in home sales this year, prices are expected to remain stable in the vast majority of the markets due to extremely limited supply,” Yun added. “Moreover, there are signs that buyers are returning as mortgage rates decline, even with inventory levels near historic lows.”
Where home prices are moving
Once again, the South saw a majority of the largest home price increases.
Top 10 metro areas with largest year-over-year price increases:
- Farmington, N.M. (20.3%)
- North Port-Sarasota-Bradenton, Fla. (19.5%)
- Naples-Immokalee-Marco Island, Fla. (17.2%)
- Greensboro-High Point, N.C. (17.0%)
- Myrtle Beach-Conway-North Myrtle Beach, S.C.-N.C. (16.2%)
- Oshkosh-Neenah, WI (16.0%)
- Winston-Salem, N.C. (15.7%)
- El Paso, Texas (15.2%)
- Punta Gorda, Fla. (15.2%)
- Deltona-Daytona Beach-Ormond Beach, Fla. (14.5%)
Many of the metro areas that are the most expensive saw little positive change in their average home prices, and some even saw their average home sale price come down. A majority of these markets are out West:
Top 10 most expensive markets in the U.S., with average price change this quarter:
- San Jose-Sunnyvale-Santa Clara, Calif. ($1,577,500; -5.8%)
- San Francisco-Oakland-Hayward, Calif. ($1,230,000; -6.1%)
- Anaheim-Santa Ana-Irvine, Calif. ($1,132,000; -1.6%)
- Urban Honolulu, Hawaii ($1,090,200; 3.4%)
- San Diego-Carlsbad, Calif. ($857,000; 1.4%)
- Los Angeles-Long Beach-Glendale, Calif. ($829,100; -1.3%)
- Naples-Immokalee-Marco Island, Fla. ($802,500; 17.2%)
- Boulder, Colo. ($759,500; -2.0%)
- Seattle-Tacoma-Bellevue, Wash. ($708,900; 1.3%)
- Barnstable Town, Mass. ($668,100; 4.0%)
“A few markets may see double-digit price drops, especially some of the more expensive parts of the country which have also seen weaker employment and higher instances of residents moving to other areas,” Yun notes.