The mortgage rate meltdown from the end of 2022 is showing up in home prices.
Among the 50 largest metro areas, San Francisco, Sacramento and San Jose saw the biggest drops in home values year-over-year, followed by Austin and Seattle. San Francisco saw home value appreciation fall by 4.9% as compared to the previous year.
Appreciation was still high in Florida, led by Miami with 12.8% growth, and Jacksonville, with 9.3% growth. Other top markets where home prices are still climbing include Hartford, Conn., Richmond, Va., and Orlando, Fla.
To be clear, at the national level, home values were still 6.2% higher than a year ago.
The typical home’s value was $329,542 in January 2023, Zillow said. Price growth has slowed from a record high of 18.8% recorded last April.
Zillow derived its data from the Zillow Home Value Index, which is based on the “neural network-driven Zestimates that Zillow produces for nearly every home in the United States,” the company said.
With mortgage rates falling, it appeared as though would-be home buyers caught a break as their cost of ownership fell. But with rates back up, the big question is, “Will sellers return?” Zillow asked.
After a short break, mortgage rates are back up — at nearly 6.87% as of Tuesday afternoon for the 30-year fixed-rate loan, according to Mortgage News Daily. Rates are up as the market anticipates further interest rate hikes from the U.S. Federal Reserve to address inflation and heat in the economy.
“In just the first two weeks of February, mortgage rates shot back up by as much as ¾ of a percentage point, erasing much of the decline from their peak around Halloween, and proving that no one can count on a consistent downward trajectory for rates this year,” Zillow said.
“Like Punxsutawney Phil returning to his burrow after seeing his shadow, buyers may return to hibernation if last month’s mortgage rate thaw turned out to be a false spring,” they added.