In a relentless surge, US home prices rose for the ninth consecutive month, establishing a new record as prospective buyers grappled with a persistently tight supply of available listings. According to seasonally adjusted data from S&P CoreLogic Case-Shiller, a national indicator of US home prices witnessed a 0.6% rise in October compared to September. Simultaneously, a seasonally adjusted measure of prices in the 20 largest cities also experienced a matching 0.6% increase.
October marked the pinnacle of the year for the acceleration of US home prices, as stated by Brian Luke, the Head of Commodities, Real, and Digital Assets at S&P Dow Jones Indices. In a released statement, Luke highlighted the nationwide phenomenon, noting, “We are experiencing broad-based home-price appreciation across the country, with steady gains seen in 19 of 20 cities.”
The measured period coincided with the ascent of 30-year mortgage rates toward 8%, resulting in an exclusion of an increasing number of potential homebuyers. Among them, many are existing homeowners deferring relocation plans while holding onto the advantageous loans secured during an era of historic low borrowing costs. This reluctance to list properties has led to a scarcity of available options in the market, consequently sustaining high prices for those determined to secure a real estate transaction.
On a year-over-year basis, the rise in US home prices became more pronounced, with a 4.8% increase in October compared to a 4% rise in September. Detroit took the lead with the most substantial increase at 8.1%, followed closely by San Diego at 7.2%, and New York at 7.1%. Notably, Portland, Oregon, was the sole city among the 20 measured where prices witnessed a year-over-year decline.
There is a glimmer of hope for a potential alleviation of pressures in the coming months. Mortgage rates have recently dipped below 7%, and economists anticipate further declines as the Federal Reserve scales down its efforts to combat inflation. Lower interest rates could bolster the purchasing power of prospective homebuyers, potentially prompting more homeowners to list their properties, thereby introducing a possible softening in prices.
A complementary index by Redfin Corp. underscores a deceleration in price growth for the third consecutive month in November. The data reveals a 0.6% monthly rise from October, representing the smallest increase since June. On a year-over-year basis, home prices were up by 6.4%, indicating a slight slowdown in the previously robust growth, according to the brokerage report.
Source: Bloomberg
