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Home prices should fall at a more rapid pace in 2023, according to Citi analysts.
Their comments come after Housing Price Index showed home prices in the United States stayed unchanged in October on a month-over-month (MoM) basis while analysts were looking for a 0.8% increase. Elsewhere, the S&P/Case-Shiller Home Price Index was reported at 8.6% on a year-over-year (YoY) basis in October, missing the analyst consensus of 10.4%.
Based on the FHFA Home Price index, Citi analysts note that South Atlantic and East South Central recorded the biggest increases in home prices, although still down about 20% from peak levels earlier this year.
“The data is somewhat lagging and we expect continued pressure in the Nov/Dec data (which will be reported in Jan/Feb) reflecting higher mortgage rates; more real-time price data from Redfin & Realtor.com suggests prices fell -2% M/M in November and stabilized somewhat in December (-0-1% M/M),” the analysts told Citi’s clients in a note.
They see home prices decelerating YoY for the remainder of 2022, and expect new home prices to drop 12% from peak 2022 levels next year.
