Home Prices Continue to Fall in November

Home prices declined in November from the prior month as higher mortgage-interest rates made home purchases less affordable for home buyers. According to the National Association of Realtors, the median price for a home was $254,000 in November, down from $258,000 in October.

The S&P CoreLogic Case-Shiller National Home Price Index fell 0.6% in November, the fifth straight month-over-month decline. This index measures home prices across the nation and the decline in November marks a continued trend of falling prices.

The index rose 7.7% in November on a year-over-year basis, down from a 9.2% annual rate the prior month.

Existing-home sales dropped sharply in 2022, as a surge in mortgage rates brought the pandemic-driven housing boom to a halt. This was the biggest drop in sales since 2014, and brought sales down to their lowest level in years.

Many economists expect prices to continue to slide from their spring peaks. Some are calling for year-over-year price declines later this year. Home prices fell 3.6% between June and November, according to the Case-Shiller index. Prices are declining fastest in Western markets, such as Phoenix and Las Vegas. In Phoenix, prices fell 1.9% in November from the prior month. In Las Vegas, prices dropped 1.7%.

George Ratiu, senior economist at Realtor.com, said that the S&P CoreLogic Case-Shiller Index showed a slowdown in housing transactions toward the end of 2022. This was due to homebuyers who were tired of the relentless surge in mortgage rates and decided to step back from the market. News Corp, the parent company of The Wall Street Journal, operates Realtor.com.

The Case-Shiller index, which is based on repeat-sales data, reports with a two-month delay. This is because homes usually go under contract a month or two before they close. Therefore, the November data is based on purchase decisions made earlier in the year.

The median existing-home price rose 2.3% in December from a year earlier, according to the National Association of Realtors. This puts the median price at $366,900.

The Case-Shiller 10-city index gained 6.3% over the year ended in November, compared with an 8% increase in October. The 20-city index rose 6.8%, after an annual gain of 8.6% in October. Price growth decelerated in all of the 20 cities.

Economists surveyed by The Wall Street Journal expected the 20-city index to gain 7%. However, the actual index only gained 5.4%.

Miami had the fastest annual home-price growth in the country in 2018, at 18.4%. This was followed by Tampa, at 16.9%. The weakest market was San Francisco, where prices fell 1.6% on an annual basis.

The Federal Housing Finance Agency's measure of home-price growth showed an 8.2% increase in November from a year earlier. The FHFA index fell 0.1% in November from the prior month on a seasonally adjusted basis.

"While higher mortgage rates have suppressed demand, low inventories of homes for sale have helped to keep prices relatively flat," said Nataliya Polkovnichenko, supervisory economist at the Federal Housing Finance Agency.

On Tuesday, the Census Bureau reported that the homeownership rate rose to 65.9% in the fourth quarter, up from 65.5% a year earlier. For households headed by someone under 35 years old, the homeownership rate rose to 38.7% from 38.3% a year earlier.