Case Shiller Home Prices: Seven Months of Declines

Bottom Line:  Home prices fell for the seventh consecutive month in January, dropping slightly less than expected. Declines were the largest in the West, led by the San Francisco Bay Area. The hardest hit regions, especially California, Oregon and Washington, were down on a year-over-year basis, while most cities were still higher year-over-year. Prices in Florida were still up 10+% year-on-year with more modest declines in the last seven months relative to other parts of the country.  Still, every market was in decline on a six-month annualized basis, suggesting all would be lower on a year-over-year basis by mid-year. Overall, the home price decline in response to higher mortgage rates was rapid, but the pace of declines has decelerated 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.