• House prices rose for the first time in 8 months.
• Miami recorded the biggest annual increase while San Diego, Seattle and San Francisco were the worst performing cities.
• PNC forecasts a 10% year-over-year decline in house prices in 2023.

House prices rose modestly in February from January after declining for seven straight months, according to the S&P CoreLogic Case-Shiller National Composite Index. The index rose 0.2% (after seasonally adjustments) in February from January following a 0.2% decline in January. Annual house price appreciation decelerated to 2.1% in February, the slowest pace since July 2012, down from 3.8% in January. Annual price appreciation has now decelerated for eleven straight months. With the increase in February, house prices are now 4.9% below the June 2022 peak. The S&P CoreLogic Case-Shiller indices are repeat sales indices calculated using three-month moving averages.

The S&P CoreLogic Case-Shiller 20-City Index recorded a 0.4% gain in February versus February 2022, down from 2.6% in January. Miami (10.8%), Tampa (7.7%) and Atlanta (6.6%) reported the highest year-over-year price increases while San Diego (-4.2%), Seattle (-9.3%) and San Francisco (-10.0%) experienced the sharpest yearly declines. Prices declined from the prior month in all cities tracked by the index except Miami. The biggest monthly declines were in San Francisco (-1.3%), Seattle (-1.4%) and Las Vegas (-1.4%).

The housing market correction has been more evident in the West where house prices skyrocketed in recent years. Miami recorded the biggest year-over-year gain in February for the seventh straight month. San Diego, Seattle and San Francisco recorded the sharpest yearly declines for the second straight month. Looking ahead, the housing market correction will likely continue through 2023 as the Fed keeps the fed funds rate elevated and the U.S. economy slows.

PNC expects the Fed to raise the fed funds rate by 25 basis points at its meeting next week. PNC forecasts a mild recession in the second half of 2023 as the drag from higher interest rates weighs on economic activity, with further deterioration in the housing market.

The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance, and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.