GlobeSt.com

Major corrections are underway in exurban regions that became popular during COVID-19.

Annual home price growth dipped to 6.9% in December, down from a series high of 20% appreciation in April, according to CoreLogic. Prices declined by 0.4% over November figures — and the firm predicts annual US home price gains will slow to 3% by December 2023.

Just nine states posted double-digit year-over-year price gains at the end of last year, compared to 48 that registered such growth in April. And layoffs — or the specter of layoffs — may also be affecting home prices and demand in cities like San Francisco and Seattle, both of which posted significant home price deceleration in November. And Idaho was the only state to register an annual home price loss in December (-1%), compared with its 17% gain recorded in April 2022.

“The pandemic-induced migration to suburban, exurban and rural areas may be winding down, as part of the U.S. workforce gradually returns to offices,” CoreLogic analysts note in a report breaking down the firm’s Home Price Index and forecast for December 2022.

“The continued slowing of home prices at the end of 2022 reflects weaker housing market demand, primarily caused by higher mortgage rates and a more pessimistic economic outlook in general,” said Selma Hepp, chief economist at CoreLogic, in a statement. “But while prices continued to fall from November, the rate of decline was lower than that seen in the summer and still adds up to only a 3% cumulative drop in prices since last spring’s peak.”

“Major corrections” are also underway in exurban regions that became popular during COVID-19, Hepp says. But “while price deceleration will likely persist into the spring of 2023, when the market will probably see some year-over-year declines, the recent decrease in mortgage rates has stimulated buyer demand and could result in a more optimistic homebuying season than many expected.”

On the bright side, Miami posted the highest year-over-year home price increase of the country’s 20 largest metro areas in December, at 19.5%, while Tampa retained the #2 spot at 14.1%. At the state level, Florida and Vermont had the highest annual home price gains, 15.2% and 13.5%, respectively.