A new report by data analytics provider CoreLogic reveals in many ways a tale of two very different housing markets. At one extreme, the West is slowing, and at the other extreme, the East is rising.
Even as home prices grew for the 133rd straight month in February, the 4.4% increase still was nothing to write home about. That’s because it was the lowest recorded since 2019. Eight states and districts recorded annual home price losses, with much of the depreciation seen in the relatively expensive West, including California, Idaho, Oregon, Washington and Utah.
The recent wave of layoffs at tech hubs has likely affected housing demand on the West Coast. However, as noted in the latest CoreLogic S&P Case-Shiller Index, home price gains are holding steady in some large East Coast metros, as workers return to offices and buyer demand renews in areas that saw relatively less appreciation during the pandemic. Areas in the South are also holding up well, mostly due to their relative affordability compared with the rest of the country.
Selma Hepp, chief economist at CoreLogic, said that the divergence in home price changes across the nation reflects America’s divided housing market. “Declines in the West are due to the tech industry slowdown and a severe lack of affordability after decades of undersupply,” she explained. “The consistent gains in the Southeast and South reflect strong job markets, in-migration patterns and relative affordability due to new home construction.”
Hepp added, “But while housing market challenges remain, particularly in light of mortgage rate volatility and the ongoing banking turmoil, pent-up home buyer demand is responding favorably to lower rates in many markets. This trend holds true even in the West, leading to a solid monthly gain in home prices in February.”
She noted that home prices rose by 0.8% in February, double the month-over-month increase historically seen and indicating that prices in most markets have already bottomed out.
In February, Miami landed on the list of the highest year-over-year home price increase of the country’s 20 tracked metro areas in February, at 15.6%, while Tampa continued to rank second at 9.3%.
Florida and Maine recorded the highest annual home price gains, 11.3% and 10.3%, respectively. South Carolina posted the third-highest growth, with a 9.2% year-over-year increase. Eight states and districts recorded annual losses: Washington (-4.9%), Montana (-3.1%), Nevada (-1.7%), Idaho (-1.6%), Utah (-1.6%), California (-1.5%), Washington, D.C. (-1.2%) and Oregon (-0.7%).
Looking ahead, CoreLogic forecasts show annual home price gains slowing to 3.7% by February 2024.