Home prices continue to lose ground, but the Southeast remains strong 

Home prices continued rising at a slower pace for the sixth straight month in December, with annual price declines reported in San Francisco and Seattle, according to two economic indices released Tuesday.

The Case-Shiller National Home Price Index and the Federal Housing Finance Agency House Price Index for December show continued cooling in home value increases. 

The monthly seasonally adjusted Case-Shiller index fell .3% for December, while the FHFA seasonally adjusted index dropped .1%.  

Case-Shiller: All cities lost ground, but the Southeast remains strong

Case-Shiller data is on a six-month streak of lower home prices overall for the 10-city and 20-city indexes. The 10-city composite annual increase was 4.4%, and the 20-city composite rose 4.6% — both down around 2 points from the previous month.

The national index posted a 5.8% yearly gain in December, down from 7.6% the prior month. 

Miami, Tampa, and Atlanta had the biggest increase among the core markets for December. Miami was in the lead for the fifth straight month with a 15.9% increase, followed by Tampa with a 13.9% increase and Atlanta at 10.4%. 

Despite the respectable increases in the leading markets, all 20 cities had month-over-month declines in December, and two metros posted annual declines: San Francisco, which was down -4.2% year-over-year, and Seattle, which dropped -1.8% year over year.

"Unsurprisingly, the Southeast and South were the strongest regions, and the West continued as the weakest," said Craig J. Lazzara, Managing Director at S&P DJI.

Lazzara said higher interest rates amid inflation continue to concern consumers. He also predicted that home prices will continue to rise at a slower pace.

"The prospect of stable, or higher, interest rates means that mortgage financing remains a headwind for home prices, while economic weakness, including the possibility of a recession, may also constrain potential buyers," Lazzara said. "Given these prospects for a challenging macroeconomic environment, home prices may well continue to weaken."

Added Lisa Sturtevant, Bright MLS chief economist: "It's possible that housing market activity hit bottom in December and that the housing market has begun to rebound in the first two months of 2023. However, there is still a lot of uncertainty in the market."

FHFA: National price growth nearly flat since Q3

The FHFA reported annual home prices rose 8.4% in the fourth quarter of 2022. House prices were up .3% from the third quarter of 2022, but down .1% between November and December.

"House price appreciation continued to wane in the fourth quarter," said Nataliya Polkovnichenko, FHFA economist for research and statistics. "House prices grew at a much slower pace in recent quarters amid higher mortgage rates and a decline in mortgage applications. These negative pressures were partially offset by historically low inventory."

Similar to the Case-Shiller findings, the Southeast fared the best, though Hawaii and Maine were strong runners-up. The five states with the biggest gains were Florida at 15.2%, North Carolina at 13.4%, South Carolina at 12.9%, Hawaii at 12.8%, and Maine at 12.2%. 

Western states posted small gains, and the District of Columbia lost ground. Areas with the slowest annual growth were Washington, D.C., at -.8%, California at 2.3%, Idaho at 3.1%, Oregon at 3.6%, and Washington at 3.7%.

Across metropolitan areas, house prices rose in all but six of the top 100 areas over the last four quarters. North Port-Sarasota-Bradenton, FL, posted the biggest annual gain at 20.1%. 

The metropolitan area with the biggest price drop was Oakland-Berkeley-Livermore, CA, at -4.3%.