Annual home price growth increased 1.4% in May, signaling the 12th straight month of appreciation cooling, according to the latest data by CoreLogic.
However, home prices still increased for the 136th straight month in May, CoreLogic said. Home prices increased by 0.9% on a month-over-month basis compared with April.
“After peaking in the spring of 2022, annual home price deceleration continued in May,” Selma Hepp, CoreLogic’s chief economist, said in a statement. “Despite slowing year-over-year price growth, the recent momentum in monthly price gains continues in the face of recent mortgage rates increases.”
“Nevertheless, following a cumulative increase of almost 4% in home prices between February and April of 2023, elevated mortgage rates and high home prices are putting pressure on potential buyers,” Hepp continued. “These dynamics are cooling recent month-over-month home price growth, which began to taper and is returning to the pre-pandemic average, with a 0.9% increase from April to May.”
Nonetheless, CoreLogic predicts annual home price gains could increase to 4.5% by May 2024.
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A significant number of Western states experienced annual home price declines year-over-year in May, according to the CoreLogic report.
The organization ties this trend to out-migration from less-urban locations, where many people moved to at the height of the COVID-19 pandemic, as well as affordability issues created by recent home price surges.
These are the areas that saw major home price losses, CoreLogic reported.
While some areas experienced price decreases, Miami, Florida posted the highest annual home price increase of 11.8% in May out of the 20 metro areas tracked by CoreLogic. Atlanta, Georgia and Charlotte, North Carolina posted the next-highest gains, both at 4.4%.
“Northeastern states and Southeastern metro areas continue to see larger home price gains compared with other areas of the country, due to both workers slowly moving back to job centers in some areas of the country and settling in relatively affordable places in others,” CoreLogic said in a statement.
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Despite months of slowdowns in home price growth, some homeowners said they had regrets about becoming homeowners in 2023, according to a survey by Clever Real Estate.
In fact, about 93% of homebuyers said they had regrets about the homebuying process in 2023, an increase from 72% in 2022, according to the survey. More than half (58%) of respondents said they believed their home was overpriced.
Many homeowners ended up spending more on their homes than the national average. The typical buyer spent 23% more on their home than the national average price of $516,500 and 31% more than the $500,156 they paid in 2022, the survey said.
“The sheer lack of homes for sale has kept prices inflated,” Clever said in its report.
But many are still eager to find the right home.
“Buyers’ purchasing power may be limited by high mortgage rates, but they’re still willing to pay top dollar for the right property,” Clever said in its report. “Although competition has eased nationwide, a surprising 38% of home buyers still paid over the asking price for a home in 2023 — compared to 31% in 2022.”
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