Case Shiller Home Prices: Six Months of Declines to End '22

Bottom Line:  Home prices fell for the sixth consecutive month in December, dropping even more than expected. Every major market fell in December. Declines were most extensive in the West, with Portland, the L.A. area, Seattle, and Phoenix leading the declines. While year-on-year readings were still higher in most cities, Seattle and San Francisco were the first to drop to negative year-on-year readings. More importantly, the 6-month annualized declines were negative for every major metro area in the 20-city index, suggesting all markets will drop into negative territory year-on-year. Overall, the home price decline in response to higher mortgage rates was rapid, but the pace of declines was decelerating modestly. Expect the market to continue to rebalance at modestly lower prices amid continued higher mortgage rates, but the losses should slow and stabilize at some point in 2023 as supply remains tight and regular demographic-led demand continues.