After more than a decade of overheated growth, 2022’s rapid increase in mortgage rates put the brakes on the U.S. housing market.
Year-over-year home price growth increased for the 130th straight month in November, but gains in the housing market slowed significantly since the spring of 2022. Still, most homeowners were in positive-equity territory throughout the first three quarters of the year, and mortgage delinquencies and foreclosure rates remain near historic lows.
“The wild ride known as the U.S. housing market slowed dramatically in the fall of 2022, as mortgage rates surged and home prices remained high,” said Molly Boesel, principal economist at CoreLogic. “Home sales started off strong in early 2022 but took a nosedive later in the year. On the plus side, generous amounts of home equity will protect many borrowers from experiencing the type of foreclosure activity seen during the Great Recession.”
Here’s a high-level overview of major U.S. housing market trends in 2022, as reported in CoreLogic’s regular economic reports, which include data dating back several decades, as well as analyses and unique insights from the company’s Office of the Chief Economist.
Home Price Growth Declined Significantly Between Spring and Fall
According to data from CoreLogic’s monthly Home Price Index, U.S. year-over-year home price growth reached 20.1% in April 2022, the highest level recorded in more than two decades. However, appreciation has tapered off every month since, falling to 8.6% in November.
Sun Belt states led the nation for annual home price gains for most of the year, most notably Florida, which posted the highest gain in the country from February to November. This trend partially reflects Americans migrating from more expensive areas in the West to more affordable areas of the country, though price growth in southern states has followed the national trend and slowed in recent months.
The year’s spike in interest rates is the primary factor in moderating home price growth, with Freddie Mac data putting 30-year fixed-rate mortgages at 3.22% in early January 2022 compared with a yearly high of 7.08% in mid-November. Despite the slowdown, a major downturn is unlikely due to a shortage of available homes for sale, strong mortgage underwriting standards and an unemployment rate that has returned to pre-pandemic levels.
Home Equity Growth Remains Strong Despite a Cooling Market
The strong home price growth in 2022 led to robust home equity gains across the country for the nearly two-thirds of American homeowners with a mortgage.
CoreLogic’s quarterly Home Equity Report shows that in the first quarter of 2022, borrowers gained a collective $3.8 trillion in home equity since the first quarter of 2021, a 32.2% increase. During that period, US homeowners with a mortgage gained an average of $64,000.
But since home price growth is the primary driver of equity growth, increases slowed as prices cooled. In the third quarter of 2022, homeowners gained a total of $2.2 trillion in equity than during the same quarter in 2021, an increase of 15.8% and averaging $34,300 per borrower.
Mortgage Performance Is Healthier Than Ever
CoreLogic’s most recent Loan Performance Index shows that, despite 2022’s surge in mortgage rates, almost all borrowers were able to meet their monthly payments during the year.
For the first 10 months of 2022, the number of homeowners with a mortgage who were at least 30 days late on their payments hovered between 3.4% and 2.7%, with the latest data reporting a 2.8% overall delinquency rate in October. On an annual basis, mortgage delinquencies dropped for the 19th consecutive month in October.
Foreclosure rates remained near record lows throughout most of 2022, bottoming out at 0.2% in February and remaining at 0.3% through October. The fact that 99% of borrowers have locked in a mortgage rate that is lower than current rates helps prevent most homeowners from making late payments or defaulting on them altogether.
Rent Price Growth Trends Follow Home Price Patterns
Like home price gains, U.S. rental prices relaxed in 2022, reaching single digits in October for the first time since June 2021.
CoreLogic’s monthly Single-Family Rent Index shows that year-over-year rent growth slowed to 8.8% in October, down from 13.9% in the spring of last year. Florida cities led the nation for annual rent increases for much of the year, with Miami and Orlando holding the top two spots, respectively, since January.
In addition to monthly and quarterly reports on the state of the US housing market, CoreLogic’s expert economic team regularly weighs in on data and trends that affect all parties involved in the property industry. Check back frequently for the Office of the Chief Economist’s commentary here, and keep up with CoreLogic Intelligence posts for leading property industry data and insights, including information on climate change, natural disaster consequences, construction trends and more.
