Home price growth in early spring higher than anticipated 

While lacking the punch of the past few years, home appreciation still rose in the early part of the spring, with the West showing a bit of a rebound on a month-to-month basis.

The latest data from the S&P CoreLogic Case-Shiller Index showed price recovery in all 20 metro areas studied between February and March, with its national index rising 1.3% overall. On a year-over-year basis, the national index put appreciation at 0.7%.

Home price growth in the early spring was stronger than initially expected, reflecting a major imbalance in the housing market, said Selma Hepp, chief economist at CoreLogic.

"While eager homebuyers jumped in as soon as mortgage rates retreated from their 7% highs, this market dynamic was not met with the same enthusiasm from sellers," Hepp said, which has further constrained already tight inventory, leading to price pressure.

The Federal Housing Finance Agency, which uses loan purchasing data from Fannie Mae and Freddie Mac across all 50 states for its housing index, found that homes appreciated 4.3% overall in the first quarter of 2023 compared to a year earlier. It was the slowest rise for the first quarter in at least 10 years.

Case-Shiller shows monthly improvement in the West, annual gains in the Southeast

The biggest change in the Case-Shiller Index was seen in West Coast cities, which previously fell more than any other region in the past year. Metros that may be on the rebound were San Francisco (up 3% between February and March), San Diego (up 2.5%) and Seattle (up 2%), which posted the biggest month-to-month gains in the survey.

On an annual basis, however, all three cities experienced year-over-year price declines. Seattle posted the biggest drop, falling 12.4%, while San Francisco fell 11.2%.

While slowing on a month-to-month basis, the Southeast continued to lead the way in year-over-year appreciation. Miami topped the list, with prices rising 7.7% year-over-year, followed by Tampa (up 4.8%), Charlotte (up 4.7%) and Atlanta (up 4.5%).

"Two months of increasing prices do not a definitive recovery make, but March's results suggest that the decline in home prices that began in June 2022 may have come to an end," said Craig J. Lazzara, Managing Director at S&P DJI. "That said, the challenges posed by current mortgage rates and the continuing possibility of economic weakness are likely to remain a headwind for housing prices for at least the next several months."

FHFA index finds 24-point spread among biggest gainers, decliners

In the FHFA home appreciation study, states in the western half of the U.S. experienced the biggest year-over-year declines. Utah topped the list, falling 4.3% year-over-year, followed by Nevada, dropping 3.6%. South Carolina (up 9.5%) and North Carolina (up 9.3%) saw the greatest gains in home appreciation.

Among the 100 largest metro areas, Miami had the biggest year-over-year increase in appreciation at 14.1%, followed by Winston-Salem (up 12.6%) and Syracuse (up 12.2%). 

The biggest declines in the FHFA's home index were San Francisco (down 10.1%), Austin (down 8.5%) and Oakland (down 7.3%).

Looking ahead, the home price appreciation picture remains muddy. Debt ceiling negotiations within the federal government, while moving forward, are still a wild card. A failure to reach a deal — and the subsequent possibility of a default — could create havoc.

"The future of the housing market hinges on the outcome of current economic uncertainty as mixed signals obscure the future of the economy," said Realtor.com economic data analyst Hannah Jones.

Even so, "demographic fundamentals, combined with robust income growth and scarce inventory, may mean that pressure on home prices will persist," said Hepp.