US Home Prices Rise Despite Fourth-Quarter Slowdown

U.S. annual home prices continued to rise in December, although the pace of growth slowed compared to the previous quarter. The Federal Housing Finance Agency (FHFA) reported a 6.6% increase in home prices from the previous year, slightly lower than the 6.7% growth seen in November. This deceleration followed a period of rapid growth, with November experiencing the fastest annual growth since December 2022.

Despite the yearly increase, home prices only saw a modest 0.1% increase in December compared to a 0.4% increase in November. Anju Vajja, acting deputy director for FHFA’s division of research and statistics, noted that while home prices increased throughout 2023, the market showed signs of softening in the fourth quarter, with lower house price appreciation than in the previous quarter.

The FHFA’s data also showed that prices increased by 1.5% sequentially in the final quarter of 2023, down from 2.1% in the previous quarter. This slowdown in price growth coincided with a period of mortgage rate stability, with the average rate on the 30-year fixed-rate mortgage remaining below 7% since early December 2023. The Federal Reserve has also refrained from raising its benchmark interest rate since July.

Despite the overall slowdown, all U.S. regions saw annual price gains in December. The New England and Middle Atlantic regions experienced the highest appreciation, with prices rising by 10.1% and 9.1%, respectively.