U.S. housing cools further, with prices down 3% from the peak
The U.S. housing slump stretched into a seventh month in January.
Home prices nationally fell 0.2% from December, according to seasonally adjusted data from S&P CoreLogic Case-Shiller. The index is now down 3% from its record high, reached in June.
Prices have continued to soften as seller discounts become more common in a market where buyer demand has been sagging for months. Toward the end of 2022 and into January, mortgage rates eased slightly from the peak in November, giving some house hunters incentive to negotiate a deal.
While prices in January were still higher than they were a year earlier, the pace of gains has cooled. The national index was up 3.8% annually, down from the 5.6% gain in December, non-seasonally adjusted data show.
Seattle remained among the coolest housing markets in the country, seeing a 1.4% dip in home prices from December to January, the eighth consecutive month-to-month decline.
Compared to January 2022, Seattle-area prices were down 5.1%. Among the 20 cities Case-Shiller tracks, only San Francisco saw a larger year-over-year drop.
Seattle-area home prices peaked in May 2022, according to the index. Prices dropped 16.3% from May 2022 to January 2023.
Case Shiller, which lags by two months, tracks single-family home prices in King, Snohomish and Pierce counties.
Despite turmoil in the banking industry “the Federal Reserve remains focused on its inflation-reduction targets, which suggest that rates may remain elevated in the near term,” Craig Lazzara, managing director at S&P Dow Jones Indices, said in a statement Tuesday. “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.”
The housing market is now in what’s traditionally its busiest season, when families rush to settle into new homes before the next school year starts. But higher borrowing costs and uncertainty over the economy are likely to continue to limit demand this spring, according to Hannah Jones, economic data analyst at Realtor.com.
In addition, Fed Chair Jerome Powell signaled last week that the regional banking crisis may lead to stricter lending requirements, which in turn could make getting a mortgage more difficult.
“This spring’s sales pace is expected to remain lower than last year,” Jones said. “Many sellers will feel the pressure to list their home for a lower price to ensure sufficient buyer attention and a quick sale.”
Seattle Times real estate reporter Heidi Groover contributed to this report.