- House prices fell for the seventh consecutive month in January.
- House prices fell from the prior month in all 20 cities tracked by the Case-Shiller 20-City index.
- PNC forecasts a 10% year-over-year decline in house prices in 2023.
House prices declined for the seventh straight month according to the S&P CoreLogic Case-Shiller National Composite Index. The index fell 0.2% (after seasonal adjustments) in January from December following a 0.4% decline in December. This marked the seventh straight decline in house prices. Annual house price appreciation decelerated to 3.8% in January, the slowest pace since December 2019, from a downwardly-revised 5.6% in December. Annual house price appreciation has now decelerated for ten straight months. 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 2.6% gain in January versus January 2022, down from 4.6% in December. Miami (13.8%), Tampa (10.5%) and Atlanta (8.4%) reported the highest year-over-year price increases while San Diego (-1.4%), Seattle (-5.1%) and San Francisco (-7.6%) experienced the sharpest yearly declines. Prices declined in January from the prior month in all 20 cities tracked by the index. The strongest monthly declines were in Denver (-0.8%), Las Vegas (-1.5%) and Seattle (-1.3%).
To tame inflation and cool the U.S. economy, the Fed embarked on a monetary policy tightening program last year. The Fed started raising the fed funds rate in March 2022 and restarted its quantitative tightening program in June 2022.
With the Fed’s quantitative program, it is aiming to roll off as much as $95 billion of assets (Treasurys and mortgage-backed securities) a month which would put upward pressures on long-term interest rates. The housing sector has slowed remarkably in response to the Fed’s aggressive hiking cycle. Looking ahead, the housing market correction will likely continue through 2023 due to deteriorating affordability, increased borrowing costs and elevated recession risks. An extended banking crisis could lead to tighter lending standards and increase borrowing costs further. PNC forecasts a 10% year-over-year decline in house prices in 2023.
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.
