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Index: Home Price Growth Slowed Again In November

David Krechevsky
Jan 31, 2023
home prices decline

Case-Shiller Index posts smaller gain; First American RHPI still shows affordability decline.

  • S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported a 7.7% annual gain in November, down from 9.2% in October.
  • All 20 cities reported lower price increases in the year ending November 2022.
  • In November 2022, the RHPI increased by 60% on an annual basis.

Home price growth continued to slow in November, reflecting the slowdown in home sales, according to the S&P CoreLogic Case-Shiller Indices released Tuesday.

In addition, a report from First American Financial Corp. found that home prices are falling fastest in overvalued markets.

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, reported a 7.7% annual gain in November, but that was down from a 9.2% increase in October. The 10-City Composite annual increase was 6.3%, down from 8% in the previous month. The 20-City Composite posted a 6.8% year-over-year gain, down from 8.6% in October.

Miami (18.4%), Tampa (16.9%), and Atlanta (12.7%) reported the highest year-over-year gains among the 20 cities in November. All 20 cities reported lower price increases in the year ending November 2022 versus the year ending October 2022, the report said. 

Before seasonal adjustment, the U.S. National Index posted a 0.6% month-over-month decrease in November, while the 10-City and 20-City composite indexes posted decreases of 0.7% and 0.8%, respectively.

After seasonal adjustment, the U.S. National Index posted a month-over-month decrease of 0.3%, and the 10-City and 20-City composites both posted decreases of 0.5%.

In November, all 20 cities reported monthly declines before seasonal adjustments. After seasonal adjustments, 19 cities reported declines, with only Detroit increasing 0.1%.

Stepping Back

“Today’s S&P CoreLogic Case-Shiller Index showcases the slowdown in housing transactions toward the tail end of 2022, as homebuyers worn tired by the relentless surge in mortgage rates took a bigger step back from the market,” said George Ratiu, senior economist for “The index tracks price figures from the months of September, October, and November. Sales of existing homes in November declined, leaving more sellers to ponder their pricing strategies, especially as the start of the holiday season redirected people’s focus away from real estate.”

Ratiu said that drop in activity led home prices to decelerate. 

“November also saw the Freddie Mac 30-year fixed rate rise above 7% for the second time in 2022,” he said. “Even though the rate fell in the second half of the month, buyers were squeezed by higher payments at a time when overall consumer prices continued rising.”

Ratiu noted that housing markets nationwide have adjusted since November, “with the number of homes for sale continuing to grow, properties spending longer on the market, and price growth moderating further. The demand-supply dynamics have placed buyers on a stronger footing at the start of 2023, providing them much-needed leverage at the negotiation table.”

In addition, mortgage rates have continued to fall, moving closer to 6% at the end January, but buyers are not likely to see rates drop significantly lower in the next few weeks, Ratiu said.

“Financial and real estate markets are keeping a close eye on this week’s meeting of the Federal Reserve Open Markets Committee (FOMC), expecting a more moderate rate hike in light of the slowing inflation. However, the Fed is poised to continue pushing the funds rate higher during this year in order to bring inflation near the 2% target. For buyers and sellers, this signals additional adjustment in median prices in the months ahead.”

First American RHPI

Alongside the S&P CoreLogic Case-Shiller Index report, First American Financial Corp., a provider of title, settlement, and risk solutions for real estate transactions, released its November 2022 First American Real House Price Index (RHPI). 

The RHPI measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state, and metropolitan area levels. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability, the company said.

“In November 2022, the RHPI increased by 60% on an annual basis,” said Mark Fleming, chief economist at First American. “This rapid annual decline in affordability was driven by two factors — a 7.6% annual increase in nominal house prices and a 3.7 percentage-point increase in the average 30-year, fixed mortgage rate compared with one year ago.”

He continued, “Even though household income increased 3.5% since November 2021 and boosted consumer house-buying power, it was not enough to offset the affordability loss from higher mortgage rates and still-strong nominal house price growth”

Fleming said the loss of affordability has prompted buyers to pull back from the market, putting downward pressure on prices. 

While still elevated by historical standards, nominal house price appreciation has slowed considerably since early 2022, First American said. Nationally, annual nominal house price growth peaked in March 2022 at nearly 21%, but has since decelerated by more than 13 percentage points to 7.6% in November, it said

“Real estate dynamics are local, yet nearly every market in the country during the pandemic was characterized as a seller’s market. Wherever you turned, multiple-offer bidding wars were the rule, not the exception,” Fleming said. “However, as house prices adjust to the reality of higher mortgage rates, the pace of adjustment will vary significantly by market.”

Overvalued Markets

Fleming said many of the markets with the largest price declines from peak — such as San Francisco, San Jose, and Phoenix — are also some of the more overvalued markets, meaning that the median existing-home sale price exceeded house-buying power in these markets.

“If housing is appropriately valued, house-buying power should equal or exceed the median sale price of a home,” he said. “Many of the markets where house prices have not yet declined — such as Louisville, Kentucky, and Kansas City, Missouri — are still considered undervalued, meaning house-buying power exceeded the median existing-home sale price in November. There are exceptions to this relationship, but generally it seems that the most overvalued markets are correcting the fastest.”

He added there is a silver lining for the Top 50 markets.

“While price changes vary by market, there is one trend that bodes well for all top 50 markets — much of the homeowner equity gained during the pandemic remains.”

For example, he said, in both San Francisco and San Jose, house prices increased by 31% and 29% from February 2020 to their respective peaks in 2022. Kansas City and Hartford, Conn., gained 48% and 40% from February 2020 to their respective peaks in 2022. 

“As the housing market rebalances, price declines will continue across many markets, but those declines would have to be substantial to erase all of the equity gains accumulated by homeowners over the last few years,” Fleming said.

November 2022 RHPI Highlights 

  • Real house prices decreased 1.2% between October 2022 and November 2022.
  • Real house prices increased 59.5% between November 2021 and November 2022.
  • Consumer house-buying power, how much one can buy based on changes in income and interest rates, increased 1.3% between October 2022 and November 2022, and decreased 32.5% year over year.
  • Median household income has increased 3.5% since November 2021 and 78% since January 2000.
  • Real house prices are 41.7% more expensive than in January 2000.
  • Unadjusted house prices are now 48% above the housing boom peak in 2006, while real, house-buying power-adjusted house prices are 0.8% above their 2006 housing boom peak.
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