The mortgage rate slowdown is being reflected in home prices through late 2022.
According to a new report, the typical US home saw a 0.1% drop in value in December compared to the previous month. reports from Zillow Z,
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Among the 50 largest metro areas, San Francisco, Sacramento and San Jose saw the largest year-over-year declines in home values, followed by Austin and Seattle. San Francisco saw a 4.9% drop in home price appreciation over the previous year.
Appreciation was still high in Florida, led by Miami with a 12.8% increase and Jacksonville with a 9.3% increase. Other top markets where home prices are still climbing include Hartford, Conn., Richmond, Va., and Orlando, Fla.
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To be clear, home values nationally were still 6.2% higher than a year ago.
Zillow said the typical home value in January 2023 was $329,542. Price growth has slowed from the record high of 18.8% recorded last April.
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Zillow obtained its data from the Zillow Home Value Index, which is “based on neural network-powered Zestimates that Zillow produces for nearly every home in the United States,” the company said.
With mortgage rates falling, it appeared as if would-be home buyers got a break as their cost of ownership fell. But with rates rising, the big question is “will sellers come back?” Zillow asked.
After a short break, mortgage rates are back up — for 30-year fixed-rate loans at about 6.87% as of Tuesday afternoon, according to Mortgage News Daily. Rates are up as the market expects further interest rate hikes from the US Federal Reserve to take out the heat on inflation and the economy.
“In the first two weeks of February, mortgage rates rose by ¾ of a percentage point, erasing their decline from their peak around Halloween, and proving that no one can count on a continued downward trajectory for rates.” Can’t do it this year,” Zillow said.
“Like Punxsutawney Phil returning to his burrow after seeing his shadow, buyers could return to hibernation if last month’s mortgage rate thaw turns out to be a false spring,” he added.
