Even as home prices continued to post strong year-over-year growth in August, rising 13.5% for the 127th consecutive month of annual gains, CoreLogic is predicting much smaller yearly home price growth moving forward.
August’s double-digit yearly increase is the lowest year-over-year appreciation since April 2021 and it marks the fourth straight month of slowing price growth, according to the data and analytics firm’s Home Price Insights report published on Tuesday.
Month-over-month, home prices declined 0.7% in August and are predicted to remain flat on a monthly basis in September. The CoreLogic HPI Forecast also indicates that home price will increase just 3.2% year-over-year from August 2022 to August 2023.
CoreLogic stated that the month-over-month decrease in August and its modest HPI forecast reflects the cooling homebuyer demand due to rising mortgage rates.
According to the report, the top markets at risk for price declines in the next 12 months include the Crestview-Fort Walton Beach-Destin, Florida metro area; along with the Seattle suburbs of Bremerton-Silverdale, Washington; as well as Reno, Nevada; Boise City, Idaho; and Bellingham, Washington. While the Crestview-Fort Walton Beach-Destin topped the list with a 70%-plus probability of home price declines, all five markets had a “very high” probability of price declines. These five markets also topped CoreLogic’s list last month.
“I think this area was so undervalued for so long that prices were just low and then when everything went crazy, we became almost hyper-valued and people were willing to pay way over price,” Jodi Ketchersid, a Destin-based Corcoran Group agent and leader of The Ketchersid Team, said.
Moving forward, Ketchersid expects to see home price growth slow in Destin as the number of bidding wars drops and few buyers have high levels of flexibility in their budget, as higher mortgage rates cut into their purchase power.
Despite the slower home price growth in August, CoreLogic reported that no states posted an annual decline in home prices, with Florida (26.4%), Tennessee (20%) and North Carolina (19.9%) recording the highest levels of home price growth. Of the top-10 metro areas, Miami had the highest year over year price growth at 27.1%.