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The Case-Shiller Home Price Index showed that home prices nationwide rose by 4.8% year-over-year in October, marking the fastest acceleration rate this year. The twenty-city index was up 4.9% in October, while the ten-city index showed a 5.7% increase from the previous year. Detroit and San Diego recorded the largest gains, while Portland was the only major city that saw a decline in home prices compared to the same period last year.
Nationwide Home Price Growth
Home prices nationwide grew at the fastest rate this year, as the number of homes for sale continued to decline. The S&P CoreLogic Case-Shiller national home price index indicated prices rose by 4.8% year-over-year in October, compared to a 4% annual price increase in September. Despite ongoing increases in home prices, they did not rise as much as economists had forecasted with an expected increase of 5.1%. This marks nine consecutive months of gains for the national index, the highest national growth rate since 2022.
Twenty-City Index
The twenty-city index also showed a less-than-expected rise in home prices of 4.9%, very close to the 5% that economists had anticipated, and up from the annual increase in home prices in September of 3.9%. All three home price indicators remained at their highest levels ever, with the ten-city index up 5.7%, compared to 4.8% in September. Home prices in Miami, Atlanta, Chicago, Boston, Detroit, Charlotte, New York, and Cleveland also hit all-time highs this month.
Impact of Mortgage Rates
While mortgage rates have decreased to around 7%, they were at the highest levels in 23 years during October when the current index data was collected. As a result of the sharp rise in mortgage rates, we experienced a “lock-in” effect, where homeowners hesitated to list their homes and give up their low-interest rates. This keeps home prices elevated due to the limited number of homes available on the market. However, recent data showed that the number of listings is rising as mortgage rates decline.
Largest Price Increases in Detroit and San Diego
The home price report indicated that the housing market in Detroit experienced the largest price increase of 8.1% year-over-year, followed by San Diego at 7.2%, with 11 of the 20 major markets seeing increases in home prices from the previous month. Only Portland saw a decrease in home prices by an average of 0.6% from the same period last year.
Brian DeLeck, head of the commodities and digital assets division at S&P Dow Jones Indices, said, “Home prices increased due to the highest mortgage rates recorded in this market cycle and continued to rise. With mortgage rates easing and the Federal Reserve guiding towards a slightly more dovish stance, homeowners may have an opportunity to see more appreciation in their home values.”
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S&P CoreLogic Case-Shiller National Home Price Index. “The S&P CORELOGIC CASE-SHILLER INDEX Accelerates in October.”
Source: https://www.investopedia.com/case-shiller-home-price-index-october-2023-8420101
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