Case-Shiller index highlights persistent market strength
US home prices continued to rally in September, reflecting the housing market’s strength despite record-high mortgage rates and the wider economic turmoil.
The S&P CoreLogic Case-Shiller Home Price Index showed a 3.9% annual increase, up from the 2.5% growth recorded in the previous month. Month over month, home prices edged up 0.3% – marking eight consecutive monthly gains since prices bottomed in January 2023.
“Speeding up of annual home price growth reflects much of the pent-up demand that exists in the housing market amid very low inventories,” said CoreLogic chief economist Selma Hepp. “Also, recent robust price appreciation in some of the largest metro areas, such as Los Angeles, Boston, New York, and Miami, are contributing to the overall strength of the national price surge and reflect continued migration patterns that motivate price trends in many parts of the country.”
The 10-City Composite index experienced a 4.8% increase, up from the previous month’s 3% increase. The 20-City Composite posted a year-over-year gain of 3.9%, rising from a 2.1% increase in the prior month.
Read next: Who are the savvy homebuyers amid lack of affordability?
Notably, Detroit reported the highest year-over-year gain among the 20 cities, with a 6.7% increase in September, followed by San Diego with a 6.5% increase. Three out of the 20 cities reported a decrease in prices compared to the previous year.
However, Hepp cautioned that the impact of high mortgage rates would likely slow the price growth rate in the coming months. Despite these challenges, home prices have surpassed expectations, considering the increase in borrowing costs.
“Nevertheless, home prices are feeling the weight of high mortgage rates, which will slow the rate of price growth in the coming months,” Hepp said in a statement. “Still, despite the dramatic increase in the cost of homeownership, home prices have risen 6.4% so far this year – meaningfully beyond expectations given the rise in borrowing costs.”
Craig Lazzara, managing director at S&P DJI, commented: “On a year-to-date basis, the national composite has risen 6.1%, well above the median full calendar year increase in more than 35 years of data. Although this year’s increase in mortgage rates has surely suppressed the quantity of homes sold, the relative shortage of inventory for sale has been a solid support for prices. Unless higher rates or exogenous events lead to general economic weakness, the breadth and strength of this month’s report are consistent with an optimistic view of future results.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
