Home prices are finally starting to ease.
According to a new report by CoreLogic, annual home-price appreciation has slowed for the third month in a row in July, to 15.8%, down from 18.3% in June.
And between June and July, home prices actually fell by 0.3%, “a trend not seen between 2010 and 2019,” the company said.
The last time home prices dropped month over month was in December 2018.
CoreLogic is now expecting home prices to grow annually by 3.8% in July 2023. That’s a big drop from how home prices were trending over the last two years.
Reports on home price fluctuations month-over-month are significant. After hearing about a “housing recession” for the last few weeks, buyers and sellers are finally seeing how the fall in demand and weak housing data is affecting the market.
It takes a while for the drop in demand to show up in prices. Week after week, housing data has signaled a major slowdown in the market, as rising mortgage rates have pushed sales — and construction — downwards.
“After hearing about a ‘housing recession’ for the last few weeks, buyers and sellers are finally seeing how the fall in demand and weak housing data is affecting the market. ”
Other companies are also seeing the same declines. Home values fell in July by 0.1%, compared to the previous month, a Zillow
report said. While deceleration in home-price growth is typical for this time of the year, Zillow noted, the small decline is the first monthly dip since 2012.
The typical U.S. home value fell by $366 in July, and is now $357,107, as measured by the Zillow Home Value Index.
“Price growth is taking a decisive turn,” Selma Hepp at CoreLogic said in a statement. “The month-over-month decline suggests further deceleration on the horizon.”
Affordability has worsened even further, and monthly mortgage expenses (inflation adjusted) are “now even higher than they were at their former peak in 2006,” Hepp added.
The Bay Area in California saw the biggest drop in single-family home prices from June to July, of 3.67%, followed by Coeur d’Alene, Id. (3.51% decline), Logan, Utah (3.49%), Seattle, Wash. (3.1%) and Napa, Calif. (2.79%).
The top five markets “at risk” of prices falling include:
Crestview-Fort Walton Beach-Destin, Fla.
Boise City, Idaho.
Conversely, home-price appreciation continues with full strength in some parts of the country.
Florida took the top spot in terms of highest gains, with home prices growing 29.6% year-over-year, followed by South Dakota, and Tennessee, according to CoreLogic.
Washington, D.C. ranked last for appreciation, at 2.4% growth since last July.
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at email@example.com