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Regional Home Price Differences Continue to Be ‘Striking’

The newest S&P Dow Jones Indices (S&P DJI) S&P CoreLogic Case-Shiller Indices, which is the one of the most highly regarded measures of U.S. home prices, for June 2023 has revealed that all of the top-20 markets reported monthly price increases, the fourth such consecutive month of rising prices. 

Now with 27 years of data behind it, year-over-year, the index reported a 0.0% annual change in June 2023 compared with 2022, and was up from a loss of 0.4% in June of 2022. The 10-City Composite showed a decrease of -0.5%, which is an improvement on the -1.1% decrease in the previous month. The 20-City Composite posted a year-over-year loss of -1.2%, up from -1.7% in the previous month. 

Among major metropolitan areas that led index include Chicago (4.2$ increase), Cleveland (4.1%), and New York City (3.4%) as they reported the highest gains among the top-20 cities in June. According to the S&P DJI, there again was an even split of 10 cities reporting lower prices and those reporting higher prices in the year ending June 2023 versus the year ending May 2023; 13 cities showed price acceleration relative to the previous month. 

On a monthly basis (before seasonal adjustments) the U.S. National Index reported a 0.9% month-over-month increase in June while the 20-city composite also posted a 0.9% increase.

“U.S. home prices continued to increase in June 2023,” says Craig J. Lazzara, Managing Director at S&P DJI. “Our National Composite rose by 0.9% in June, and it now stands only -0.02% below its all-time peak from exactly one year ago. Our 10- and 20-City Composites likewise each gained 0.9% in June 2023, and stand -0.5% and -1.2%, respectively, below their June 2022 peaks.” 

“As we’ve noted previously, the recovery in home prices is broadly based. Prices rose in all 20 cities in June, both before and after seasonal adjustment. Over the last 12 months, 10 cities show positive returns. Otherwise said, half the cities in our sample now sit at all-time high prices.” 

“Regional differences continue to be striking. On a year-over-year basis, June’s three best-performing cities were Chicago (+4.2%), Cleveland (+4.1%), and New York (+3.4%) – the same three that had topped our May leader board. At the other end of the scale, the worst performers continue to be in the Pacific and Mountain time zones, with San Francisco (-9.7%) and Seattle (-8.8%) at the bottom. The Midwest (+2.8%) continues as the nation’s strongest region, followed this month by the Northeast (+1.6%). The West (-5.9%) remains the weakest region.” 

“June is the fifth consecutive month in which home prices have increased across the U.S. With 2023 half over, the National Composite has risen 4.7%, which is slightly above the median full calendar year increase in more than 35 years of data. We recognize that the market’s gains could be truncated by increases in mortgage rates or by general economic weakness, but the breadth and strength of this month’s report are consistent with an optimistic view of future results.” 

Realtor.com Economic Data Analyst Hannah Jones commented on the report after its release on Tuesday:  

“Today’s S&P CoreLogic Case-Shiller Index showed the impact of waning inventory on home prices, which maintained strength despite ongoing affordability challenges. This month’s index data tracks April, May and June, a period which saw climbing mortgage rates, which reached as high as 6.79% in early June. Limited home inventory, still-high prices and elevated mortgage rates meant that both new and existing home sales fell in June, though new home sales remained well above the previous year’s level. After strong price growth in May, home price momentum continued in June with all 20 major metro markets seeing monthly price increases, bringing the seasonally adjusted month-to-month changes in the 10- and 20-city composites up by 0.9% each. The National Home Price Index posted a 0.7% increase month over month. Despite the monthly gains, the National Index was flat year-over-year, while the 10- and 20-city indices fell 0.5% and 1.2%, respectively. All three geographic levels saw the annual gap in prices narrow relative to the previous month.” 

“Today’s market offers buyers the frustrating combination of low inventory and high home prices. Many existing homeowners remain on the sidelines of the market, content to stay put as mortgage rates reach 20-year highs. As a result, home shoppers are seeing fewer existing homes for sale and facing more competition for the homes available. Builders have started to pick up construction activity to fill this gap, but remain cautious as affordability challenges continue to stifle buyer demand. After two months of annual declines, home prices climbed compared to the previous year for the last four weeks which, combined with higher mortgage rates, means that buyers have yet to see relief from the high cost of homeownership.”  

“Though annual home price growth has moderated nationally this summer, it varies greatly market to market. In some areas, like this year’s hottest zip codes, high buyer demand keeps home inventory scarce and price growth high. Recently, annual price growth has been strongest in Midwest and Northeast markets, like Chicago (+4.2%), Cleveland (+4.1%), and New York (+3.4%) and far weaker in Western metros like San Francisco (-9.7%) and Seattle (-8.8%). Overall, the Midwest (+2.8%) and Northeast (+1.6%) saw the strongest annual price growth, while the West (-5.9%) continued to see annual price declines.” 

“The rental market could offer would-be buyers an affordable option as they save up for a home purchase. At a national level, rents have fallen annually for the last three months as increased rental inventory relieved some price pressure. Similar to the housing market, the rental market in the West is the least affordable of the regions, though it has seen affordability begin to improve. Lower priced markets have seen affordability deteriorate more significantly as affordability-driven demand started to have the opposite effect. The for-sale and rental markets are behaving similarly as buyers and renters pursue more budget-friendly options. Increased demand for affordability strains supply, resulting in climbing prices in more affordable areas, while high-priced areas see lower demand.” 

About Author: Kyle G. Horst

Kyle Horst
Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].

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