The rise in house prices weakened sharply in November

A sign is displayed in front of a home for sale on December 19, 2022 in Los Angeles, California.

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Home prices plunge into a deep winter chill as higher mortgage rates push more buyers away.

Prices in November were still 8.6% higher than the same month in 2021, but it was the first single-digit year-over-year reading in 21 months, according to CoreLogic. It is also the lowest appreciation rate since November 2020.

Prices are now 2.5% lower than the spring 2022 peak and are expected to continue falling this year. CoreLogic forecasts price movement to fall into negative territory in the spring before rebounding to around 2-3% growth in the fall.

“Although house price growth has slowed rapidly and will continue to do so in 2023, strong gains in the first half of last year suggest that total appreciation in 2022 was only slightly lower than in 2021,” said Selma Hepp, deputy chief economist. at CoreLogic. “However, 2023 will present its own challenges as consumers remain wary of both the housing market and the overall economic outlook.”

Mortgage rates started to rise again after a brief respite in November and early December. Rates had more than doubled over the summer, with the average rate on the popular 30-year fixed loan exceeding 7%. It peaked at 7.37% in late October, according to Mortgage News Daily. In November and December it fell, reaching a low of 6.13% in mid-December, but has now risen back above 6.5%.

“Potential buyers are grappling with buying amid possible further price declines and continued inventory shortages. Nonetheless, with slowly improving affordability and a more optimistic economic outlook than previously thought, the housing market could show resilience in 2023,” Hepp added.

Florida, South Carolina and Georgia saw the highest price increases in the country as shoppers continued to flock to the Sun Belt. Washington, DC ranked last, with prices up just 1.2% year over year.

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