High mortgage rates and buyer hesitancy contribute to lowest annual gains since 2023
Home price growth across the United States has started to show signs of strain, with the S&P CoreLogic Case-Shiller Indices reporting the slowest annual increase in prices since mortgage rates reached their peak in 2023.
August saw a 4.2% year-over-year rise in home prices, down from the 4.8% annual gain recorded in July. Month-over-month, the National Index declined by 0.1% before adjusting for seasonality.
"As students went back to school, home price shoppers appeared less willing to push the index higher than in the summer months," said Brian Luke, head of commodities, real and digital assets at CoreLogic.
Luke noted that prices have decelerated over the last half-year, with appreciation dipping below the long-term average of 4.8%. Despite the general slowdown, home prices continue to reach record highs, setting new peaks for the 15th consecutive month.
The Case-Shiller 10-City and 20-City Composites also reported slower growth. The 10-City Composite, which includes areas like New York and Los Angeles, saw an annual increase of 6.0%, down from 6.8% in July. The 20-City Composite, covering a broader range of metropolitan areas, posted a 5.2% year-over-year gain, falling from 5.9% the previous month.
Month-over-month, the 20-City and 10-City Composites decreased by 0.3% and 0.4%, respectively. However, seasonally adjusted data indicates a slight gain, with the National Index rising 0.3% and the 20-City and 10-City Composites increasing by 0.4% and 0.3%.
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New York led the nation with an 8.1% increase, followed closely by Las Vegas at 7.3% and Chicago at 7.2%. On the other end of the spectrum, Denver showed the smallest year-over-year growth at 0.7%.
Regional trends reveal that states in the Northeast and West have generally outpaced those in the South. Since July 2023, blue states have shown slightly stronger home price growth than red states, with New York, Las Vegas, and Chicago reaching all-time highs.
"Regionally, all markets continue to remain positive, barely," Luke said in the report. "Denver posted the slowest annual gain of all markets this year, dropping below Portland for the first time since the spring. The Northeast remains the best-performing region, with the strongest gains for over a year.
“Currently, only New York, Las Vegas, and Chicago markets are at an all-time high. Comparing average gains of traditional red and blue states highlight a slight advantage for home price markets of blue states. With stronger gains in the Northeast and West than the South, blue states have outperformed red states dating back to July 2023."
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