First American Data & Analytics' Home Price Index found that between October 2023 and November 2023 house prices increased 0.3%. However, the year-over-year increase was 7.6% and in some states it was in the double digits.
“Preliminary November results indicate that home prices increased for the eighth consecutive month,” said Mark Fleming, chief economist at First American. “This holiday season, homeowners are the ‘grinches,’ hoarding housing supply from willing buyers and keeping upward pressure on prices. However, the new year offers hope to discouraged buyers as sellers’ anchor bias to historically low mortgage rates fades and the potential for slightly lower mortgage rates further improves affordability.”
When it comes to starter homes, First American found that prices in that category grew the fastest in many markets.
In the Atlanta, Georgia market, starter home prices grew 10.5% and in the Baltimore, Maryland market they grew 10.7%, but Nassau and Suffolk County, New York saw the highest prices, growing 19.6% year over year.
“Unsurprisingly, starter home prices grew the fastest in many markets. Would be first-time buyers hoping to become homeowners usually do so with a lower-priced starter home," said Fleming. “While the homeownership rate for millennials recently surpassed 50%, there are still a lot of potential buyers bidding against each other for the rare starter home that comes to market."
A panel of 100 housing experts that participated in a survey conducted by Fannie Mae and Pulsenomics concluded that home price growth in 2023 would clock in at 5.9%, followed by slower growth in 2024 and 2025 of 2.4% and 2.7%, respectively.
"Some, including us, had expected the rapid and significant rise in mortgage rates in 2023 to have dampened purchase demand further than it has, putting more downward pressure on home prices this past year than what appears to have occurred," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Looking beyond the recent volatility in mortgage rates, panelists expect future rates to decline meaningfully from the recent highs of 8%. This would obviously provide improved affordability for potential homebuyers, although anyone expecting the return of the extremely low rate environment from 2020 to 2022 will likely be disappointed."
