Fewer sales are unlikely to translate into lower prices for single-family homes in 2023, according to the latest quarterly report from the National Association of Realtors (NAR).

“Even with a projected reduction in home sales this year, prices are expected to remain stable in the vast majority of the markets due to extremely limited supply,” says NAR chief economist Lawrence Yun. “Moreover, there are signs that buyers are returning as mortgage rates decline, even with inventory levels near historic lows.”

Single-family existing-home sales prices climbed in almost 90% of measured metro areas—166 of 186—in the fourth quarter of 2022 despite mortgage rates eclipsing 7%, according to the latest quarterly report from the NAR. Eighteen percent of the tracked metro areas registered double-digit price increases over the same time period, down from 46% in Q3 2022.

Year over year, the national median single-family existing-home price rose 4% to $378,700, but price appreciation decelerated when compared with the third quarter’s 8.6%.

“A slowdown in home prices is underway and welcomed, particularly as the typical home price has risen 42% in the past three years,” Yun says. “Far fewer metro markets experienced double-digit price gains in the latest quarter.”

Among the major U.S. regions, the South saw the largest share of single-family existing-home sales in the fourth quarter, with year-over-year price appreciation of 4.9%. Prices grew 5.3% in the Northeast, 4% in the Midwest, and 2.6% in the West, reports NAR.

The top 10 metro areas with the largest year-over-year price increases all recorded gains of at least 14.5%, with seven of those markets in Florida and the Carolinas. Those include North Port-Sarasota-Bradenton, Florida; Naples-Immokalee-Marco Island, Florida; Punta Gorda, Florida; Deltona-Daytona Beach-Ormond Beach, Florida; Greensboro-High Point, North Carolina; Winston-Salem, North Carolina; and Myrtle Beach-Conway-North Myrtle Beach, South Carolina. Farmington, New Mexico; Oshkosh-Neenah, Wisconsin; and El Paso, Texas, comprise the final three.

Half of the top 10 most expensive markets in the U.S. were in California, including San Jose-Sunnyvale-Santa Clara; San Francisco-Oakland-Hayward; Anaheim-Santa Ana-Irvine; San Diego-Carlsbad; and Los Angeles-Long Beach-Glendale. Honolulu; Naples-Immokalee-Marco Island, Florida; Boulder, Colorado; Seattle-Tacoma-Bellevue; and Barnstable Town, Massachusetts, represent the other half.

Roughly one in 10 markets experienced home price declines in the fourth quarter of 2022.

“A few markets may see double-digit price drops, especially some of the more expensive parts of the country, which have also seen weaker employment and higher instances of residents moving to other areas,” says Yun.

The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,969, a 7% increase from Q3 2022 but a major surge of 58% from one year ago. Families typically spent 26.2% of their income on mortgage payments, up from 25% in the prior quarter and 17.5% one year ago.

Once again, first-time buyers encountered challenges related to housing’s growing unaffordability. For a typical starter home valued at $321,900 with a 10% down payment loan, the monthly mortgage payment rose to $1,931, about 7% more than Q3 2022 and an increase of almost $700, or 57%, from one year ago. First-time buyers typically spent 39.5% of their family income on mortgage payments, up from 37.8% in the previous quarter.

According to the NAR, a family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 71 markets, up from 59 in Q3 2022. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 16 markets, down from 17 in the previous quarter.