The housing market has now bottomed out, and Americans are buying homes again

Home prices in February saw double their increase historically, indicating that they have already bottomed out in most markets, CoreLogic said.

• After seven months of declines, home prices rose 0.8% in February, CoreLogic said.
• That's double their increase historically, indicating prices have bottomed out in most markets.
• Pent-up demand and falling rates are pulling Americans back into the buying market. 

The US housing market has now bottomed out, and Americans are piling back into the home-buying market once again, according to CoreLogic. 

Following seven consecutive months of declines, the CoreLogic Home Price Index showed a 0.8% rise in February from January. On an annual basis, home prices in February increased by 4.4%, per CoreLogic data. 

To be sure, there is a regional split in the housing market, with declines in the West and gains in the South and Southeast, Selma Hepp, chief economist for CoreLogic, wrote in a statement last week. 

"But while housing market challenges remain, particularly in light of mortgage rate volatility and the ongoing banking turmoil, pent-up homebuyer demand is responding favorably to lower rates in many markets," she added.

"This trend holds true even in the West, leading to a solid monthly gain in home prices in February. US home prices rose by 0.8% in February, double the month-over-month increase historically seen and indicating that prices in most markets have already bottomed out."

For March, CoreLogic anticipates that home prices will climbed 0.2% month over month, and then for February 2024 the firm expects a year-over-year increase of 3.7%. By comparison, home prices have seen annual gains of 4.6% for roughly three decades.

But CoreLogic's view of the housing market bottom is not a consensus. Both Fannie Mae and Moody's Analytics anticipate home prices to dip in 2023. 

The divergent outlooks for home prices follow nine consecutive interest rate hikes from the Federal Reserve dating back to last year, which has raised borrowing costs and interest rate volatility across the country. Still, the average 30-year fixed rate has fallen to about 6.30% after topping 7% last year.

A New York Fed survey in March found that Americans haven't been this gloomy about the year-ahead housing market since 2014. Survey respondents reported they expect home prices to grow 2.6% in the next 12 months. That's down from 7% a year ago. 

Meanwhile, in the apartment sector, demand eased through the first quarter of 2023, according to Moody's, and rent prices declined while vacancies ticked higher by the steepest margin in two years.