U.S. Home Prices Gain for Ninth Consecutive Month

S&P Dow Jones Indices (S&P DJI) has released the latest results for the S&P CoreLogic Case-Shiller Indices, a measure of U.S. home prices for October 2023 that shows that 11 of the 20 major metro markets reported month-over-month price increases.

"U.S. home prices accelerated at their fastest annual rate of the year in October,” said Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P DJI. “Our National Composite rose by 0.2% in October, marking nine consecutive monthly gains and the strongest national growth rate since 2022.”

Year-over-year, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, reported a 4.8% annual change in October, up from a 4% change the previous month. The 10-City Composite showed an increase of 5.7%, up from a 4.8% increase in the previous month. The 20-City Composite posted a year-over-year increase of 4.9%, up from a 3.9% increase in the previous month. Detroit reported the highest year-over-year gain among the 20 cities with an 8.1% increase in October, followed again by San Diego with a 7.2% increase. Portland fell 0.6% and remained the only city reporting lower prices in October versus a year ago.

“Detroit kept pace as the fastest growing market for the second month in a row, registering an 8.1% annual gain,” added Luke. “San Diego maintained the second spot with 7.2% annual gains, following by New York with a 7.1% gain. We are experiencing broad-based home price appreciation across the country, with steady gains seen in 19 of 20 cities. This month’s report reflects trendline growth compared to historical returns and little disparity among cities and regions.”

Month-over-month, before seasonal adjustments, the U.S. National Index and 10-City Composite posted 0.2% month-over-month increases in October 2023, while the 20-City composite posted a slight 0.1% increase. After seasonal adjustment, the U.S. National Index, the 10-City and 20-City Composites each posted month-over-month increases of 0.6%.

“Each of our 10-city, 20-city and National Index, remain at all-time highs, with 8 of 20 cities registering all-time highs (Miami, Atlanta, Chicago, Boston, Detroit, Charlotte, New York and Cleveland),” added Luke. “While Portland remains slightly down compared to last year’s gains, Phoenix and Las Vegas have flipped to year over year gains.  The Midwest and the Northeast region are fastest growing markets, while the Southwest and West regions have lagged other regions for over a year. A solid, if unspectacular report, this month’s index reflects a rising tide across nearly all markets.”

A recent bright spot for those struggling with housing affordability has been a steady decline in the 30-year, fixed-rate mortgage (FRM). Freddie Mac has reported that after 17 consecutive weeks eclipsing the 7% mark, that the FRM has dipped to 6.67%, thus providing slight relief for those struggling to lock in the American dream.

“Looking ahead, mortgage rates have made a significant about-face in recent weeks, slipping notably below 7%,” said Realtor.com Chief Economist Danielle Hale. “While this has not yet translated into a big sales recovery, November existing home sales increased for the first-time in five months, suggesting that if rates can hold onto recent improvements, buyer demand may be sufficient to drive a stronger home sales season than originally anticipated in Realtor.com’s 2024 Housing Forecast.”

In its 2024 Housing Market Forecast, Realtor.com predicts home prices to ease slightly, dropping less than 2% for the year on average. Combined with lower mortgage rates and income growth, this will improve the home purchase mortgage payment share relative to median income to an average 34.9% in 2024, with the share slipping under 30% by the end of the year.

“Home prices leaned into the highest mortgage rates recorded in this market cycle and continued to push higher,” added Luke. “With mortgage rates easing and the Federal Reserve guiding toward a slightly more accommodative stance, homeowners may be poised to see more appreciation.”