Economic Report: U.S. home-price rises slow again in January, with western markets leading declines

A broader measure of home prices, the national index, fell 0.2% in January, but was up 3.8% over the past year. The national index is down for the seventh month in a row.

Key details: Miami, Tampa and Atlanta reported the highest year-over-year gains among the 20 cities in January. 

San Francisco, Seattle and Portland reported the lowest year-over-year gains. San Francisco has seen home price growth fall by 4.2% from last January.

Big picture: Home buyers are grappling with not only high mortgage rates but also low inventory. Home sellers are reducing prices or offering concessions to lure buyers. As sellers adjust prices to attract buyers, the drop in home price growth is showing up in the Case-Shiller figures.

But local real-estate markets are showing a mixed picture. While home sellers in some markets are cutting prices to attract buyers, on the other side of the country, sellers are still contending with multiple bids.

What S&P said: “2023 began as 2022 had ended, with U.S. home prices falling for the seventh consecutive month,” Craig J. Lazzara, managing director at S&P DJI, said. 

Lazzara noted that the price declines in places like San Diego, San Francisco, and Seattle have made the West the country’s weakest region in terms of housing, while the the Southeast notches strong gains. 

With the U.S. Federal Reserve is focused on fighting inflation, that means mortgage rates will likely remain high in the near-term, which is bad news for the housing market. “Mortgage financing and the prospect of economic weakness are therefore likely to remain a headwind for housing prices for at least the next several months,” Lazzara added.

Market reaction: Stocks
DJIA,
+0.07%

SPX,
-0.16%
were trending lower before the market opened on Tuesday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.549%
rose above 3.5%.