Home prices maintained their momentum in late 2023. The S&P CoreLogic Case-Shiller U.S. National Home Price Index posted a 5.5% annual gain in December, up from a 5.1% gain in November, according to the latest report.
For the first time in 2023, all 20 markets reported yearly gains, with four markets rising over 8%. The U.S. National Index, the 20-City Composite, and the 10-City Composite all posted month-over-month increases of 0.2%, after seasonal adjustment.
“U.S. home prices faced significant headwinds in the fourth quarter of 2023,” Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, said in a statement. “However, on a seasonally adjusted basis, the S&P Case-Shiller Home Price Indices continued its streak of seven consecutive record highs in 2023. Ten of 20 markets beat prior records, with San Diego registering an 8.8% gain and Las Vegas the fastest rising market in December, after accounting for seasonal impacts.”
This month’s index data tracks October, November and December. In that period, mortgage rates fell sharply from 7.8% in late October to 6.6% by the end of December. In January, mortgage rates stabilized before climbing in recent weeks, inching back towards 7%.
San Diego posted an 8.8% increase in home prices in December, the highest year-over-year gain among the 20 cities. Los Angeles (8.3%) and Detroit (8.3%) followed, with Chicago (8.1%) rounding out the cities that saw more than 8% home price growth. Meanwhile, Portland held the lowest position in the ranking, posting a 0.3% increase this month.
Regionally, the Midwest and Northeast posted the strongest home-price performances.
“These areas have seen substantial price growth over the last year as buyers sought affordability near strong economic centers,” Realtor.com senior economic research analyst Hannah Jones said in a statement. “Relatively sustained demand in these markets has taxed available inventory and driven home prices and rents higher.”
Toward the end of the year, eager buyers flocked to the housing market to take advantage of the lower mortgage rates. As a result, surging demand against a constrained inventory kept upward pressure on prices.
“While S&P CoreLogic Case-Shiller Index continues to show resiliency of home prices against surging borrowing costs, it also highlights continued headwinds for the housing market, namely elevated mortgage rates and severely lacking inventory of existing homes for sale,” Selma Hepp, chief economist at CoreLogic, said in a statement.
“And as mortgage rates continue to flirt in the 7% range, it will be difficult to convince existing homeowners to move right now. Nevertheless, as the recent surge in mortgage application data has shown following a drop in rates, buyers are anxiously waiting to jump in the market as soon as mortgage rates fall. That means that 2024 will show another year of home price highs,” Hepp said.
