Advisors Mortgage Group > Market Updates > Housing Market Cooling, but Not as Bad as You Would Think

The National Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices fell 0.5% in October. Year over year, we do see a cooling in pricing, but home prices are still up 9.2%. Historically, this is always a weak time of the year for housing, as housing demand usually hits a trough near the end of the year and starts to improve going into the Spring months. Not home prices, but the pace of appreciation decelerated from 10.7% in the previous report and 20.8% at the peak in March. But again, this does not mean that home prices are down 11.6% from their peak…it means that home price gains have slowed to 9.2% annually. Most importantly, home prices have only declined 3% nationwide from their peak, and while there is no doubt that this is a softening, it’s a far cry from a crash of 20-30% declines, like we saw during the housing crash around 2008.

The Federal Housing Finance Agency released its House Price Index for the month of October, and it showed that prices were flat in October after a 0.1% rise in September and are up 9.8% year over year. It should be noted that this report measures home price appreciation on single-family homes with conforming loan amounts and unlike Case Shiller, it does not include cash buyers or jumbo loans. Also, home prices, according to FHFA, are only down 1.1% from their peak.

Lastly, CoreLogic also has a home Price Index and it showed that home prices declined by 0.2% in the month of November. Year over year, it showed that home prices are now up 8.6% which was a decline from 10.1% which was last reported. But, once again when looking at home prices versus their peak, CoreLogic showed that they have only declined 1.8%. CoreLogic forecasts going forward that home prices may show a decline for their December report of about 0.1% but they see that they will accelerate into 2023 and rise by about 3%, which is still meaningful appreciation if they are correct.

As discussed, it is evident that the housing market is cooling, but not to the degree that many sources may have you believe. When looking at these three reports, we only see a range of 1.1%-3.0% drop in home prices from their peak nationally which again is a far cry from the 20%-30% that some sources were forecasting.

Sources:
https://www.fhfa.gov/
https://www.corelogic.com/
http://bit.ly/3ZhRvDb

By: Jon Iacono