CoreLogic chief economist Selma Hepp noted that January’s annual gain was the slowest since the onset of the COVID pandemic in 2019.
“Following the housing market freefall at the end of the year, the decline in mortgage rates in December and early January spurred some much-needed optimism for the housing market,” she said. “In response to lower rates, home sales posted strong monthly gains in January and February, suggesting that pent-up buyer demand is eagerly responding to mortgage rate movements. Given the mortgage investor market response since Fed’s March meeting, home price growth may surprise to the upside if mortgage rates remain favorable, especially in light of continued supply constraints.”
However, ongoing volatility in mortgage rates and fallout from the banking crisis could put a damper on spring home-buying season, according to Hepp, particularly if credit tightening impacts mortgage availability and consumer confidence takes another hit.
“Financial news this month has been dominated by ructions in the commercial banking industry, as some institutions’ risk management functions proved unequal to the rising level of interest rates,” said Craig Lazzara, managing director at S&P DJI. “Despite this, the Federal Reserve remains focused on its inflation-reduction targets, which suggest that rates may remain elevated in the near term. Mortgage financing and the prospect of economic weakness are therefore likely to remain a headwind for housing prices for at least the next several months.”
Miami, Tampa, and Atlanta again saw the highest year-over-year gains among the 20 cities in January.
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