US home prices continued their rise in the last quarter of 2023, albeit at a slower pace compared to the previous quarter. The Federal Housing Finance Agency reported a 6.5% year-over-year increase in home prices for the fourth quarter, marking a 1.5% uptick from the third quarter. Additionally, there was a 0.1% seasonally-adjusted increase in December compared to November.
Dr. Anju Vajja, acting deputy director for FHFA's Division of Research and Statistics, noted that U.S. house prices saw modest growth throughout 2023. However, signs of a softening market emerged as house price appreciation slowed down in the fourth quarter.
Home prices experienced gains in 49 states over the past year, with Rhode Island leading the way with a 15.1% increase. Vermont followed closely with a 13.3% rise, while West Virginia, Connecticut, and New Jersey recorded gains of 12.4%, 12.2%, and 11.4%, respectively.
Conversely, Hawaii and the District of Columbia were the only markets that witnessed a decline, with home prices dropping by 3.4% and 1.2%, respectively.
The housing market's challenges were compounded by a persistent lack of inventory in many regions. High mortgage rates further deterred homeowners from listing their properties for sale, as they held onto low rates secured during the pandemic's historic lows. The 30-year fixed mortgage rate surpassed 7% in recent weeks, with Federal Reserve rate cut expectations being pushed back.
All nine of the FHFA's census divisions reported positive year-over-year house price changes. New England led the way with a 10.3% annual increase in the fourth quarter, while the West South Central division saw the smallest rise at 3.2%.
