Home prices increased at the fastest clip since 2022 at the start of the year, according to one closely watched home price gauge published Tuesday.
Home prices nationally in January were 6% higher than the same month in 2023, according to S&P CoreLogic Case-Shiller data. Prices in an index measuring changes in 20 of the nation’s large cities increased 6.6%.
Both indexes increased at the quickest annual pace since November 2022.
Seasonally adjusted prices also gained, with the 20-city index rising 0.14% from December, and the national index gaining 0.36%.
“U.S. home prices continued their drive higher,” Brian D. Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, said in a statement. “On a seasonal adjusted basis, home prices have continued to break through previous all-time highs set last year.”
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The quick annual gain was expected. The 6.6% gain in the 20-city index was in line with the consensus call among economists surveyed by FactSet. Price gains will continue, but will slow by the end of the year, some economists say.
Prices were higher than year-ago levels in each of the 20 cities tracked by the index. Prices in San Diego, Los Angeles, and Detroit were highest compared to one year prior, rising 11.2%, 8.6%, and 8.2% respectively. The cities with the slowest gains included Dallas, Denver, and Portland, Ore., where prices grew 2.9%, 2.7%, and 0.9%, respectively.
A low supply of homes for sale, combined with a relatively easy comparison with prices at the same time last year, look set to keep prices strong this spring.
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The median home in February sold for $384,500, up 5.7% from the same month in 2023, according to the National Association of Realtors. It was the greatest price increase in the trade group’s data set since October 2022.
data suggest prices have remained strong in March. Over the four-week period ended March 17, home-sale prices rose 5.3%.
Industry economists expect gains will slow later this year. The Mortgage Bankers Association estimates that home prices in the fourth quarter measured by the Federal Housing Finance Agency’s home price index will be 4.1% higher than one year prior—a slower growth rate than the anticipated 5.7% in the first quarter of this year.
expects its home price index to be 3.2% higher than one year prior at the end of the year, slower than an anticipated 7.2% first-quarter increase.
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That’s despite mortgage rates that remain higher than levels immediately before the pandemic. Higher rates and prices has made it harder for first-time buyers to enter the market. The share of buyers purchasing a previously owned home for the first time fell to 26% of all transactions in February from 28% the month prior, the National Association of Realtors said earlier this month.
The typical buyer in February needed an annual income of $113,520 to afford the median U.S. home, according to a Redfin analysis published Tuesday. That is nearly $30,000 more than the median household income, the brokerage said. The last time the typical household earned more than it needed to afford the median home was three years ago, in February 2021, according to the analysis.
Home values are stretched relative to their historic price-to-rent ratio, Mark Zandi, Moody’s Analytics’ chief economist, wrote in a Monday note. “That valuations have remained so high given the doubling in mortgage rates since just prior to the pandemic is especially surprising,” the economist wrote, adding that high home prices are supported by an undersupply of housing and the mortgage rate lock-in effect.
“For some semblance of normalcy to return to the housing market, something has to give—mortgage rates need to decline, incomes rise, and/or house prices cool considerably,” Zandi wrote. The most likely scenario is that prices move “more-or-less sideways” for one to three years. That would “allow corporate earnings and rents to catch up and valuations to normalize at least partially.”
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
Home prices likely climbed in January, according to one closely watched measure. That trend will continue but gains will narrow by the end of the year, some economists say.
The S&P CoreLogic Case-Shiller Home Price index tracking changes in 20 of the nation’s large cities is expected to have been 6.6% higher in January than it was one year prior, according to FactSet consensus estimates. A seasonally adjusted index measuring month-to-month price gains is estimated to have risen 0.15% from December’s levels. The reading will be released Tuesday at 9 a.m.
A low supply of homes for sale, combined with a relatively easy comparison with prices at the same time last year, look set to keep prices strong. If the estimates are correct, January’s annual home price increase would be the largest since November 2022, according to December’s Case-Shiller data.
The median home in February sold for $384,500, up 5.7% from the same month in 2023, according to the National Association of Realtors—the greatest price increase in the trade group’s data set since October 2022.
data suggests prices have remained strong in March: over the four-week period ended March 17, home sale prices rose 5.3%.
Industry economists expect gains will slow later this year. The Mortgage Bankers Association estimates that home prices in the fourth quarter measured by the FHFA’s home price index will be 4.1% higher than one year prior—a slower growth rate than the anticipated 5.7% in the first quarter of this year.
expects its home price index to be 3.2% higher than one year prior at the end of the year, slower than an anticipated 7.2% first-quarter increase.
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That’s despite mortgage rates that remain higher than levels immediately before the pandemic. Higher rates and prices has made it harder for first-time buyers to enter the market. The share of buyers purchasing a previously owned home for the first time fell to 26% of all transactions in February from 28% the month prior, the National Association of Realtors said earlier this month.
Home values are stretched relative to their historic price-to-rent ratio, Mark Zandi, Moody’s Analytics’ chief economist, wrote in a Monday note. “That valuations have remained so high given the doubling in mortgage rates since just prior to the pandemic is especially surprising,” the economist wrote, adding that high home prices are supported by an undersupply of housing and the mortgage rate lock-in effect.
“For some semblance of normalcy to return to the housing market, something has to give—mortgage rates need to decline, incomes rise, and/or house prices cool considerably,” Zandi wrote. The most likely scenario is that prices move “more-or-less sideways” for one to three years. That would “allow corporate earnings and rents to catch up and valuations to normalize at least partially.”
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Write to Shaina Mishkin at shaina.mishkin@dowjones.com
For the fifth month in a row, home prices in the U.K. have increased from the previous month, with prices up 0.4% in February, according to Halifax’s House Price Index, released on Thursday.
Additionally, prices were up from the same time last year, increasing 1.7% to £291,699 (US$374,779)—which is about £1,000 higher than January.
“Yet further proof that the property market is back on track with a fifth consecutive monthly increase demonstrating that real momentum is now starting to build,” said Marc von Grundherr, director of Benham and Reeves.
MORE: More Affluent Home Sellers Are Turning to Auctions. That’s Great News for Buyers.
The U.K.’s housing market suffered last year amid rising interest rates, but the market has continued to show signs of bouncing back since the increases were halted.
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“U.K. home buyers have welcomed the increased degree of market stability that has come following the decision to hold interest rates at 5.25% since September of last year, and as home buyers have returned to the market, we’ve seen declining house prices start to reverse,” said Guy Gittins, CEO of Foxtons.
Property prices increased the most in Northern Ireland, which saw an annual increase of 5%, bringing the average home price to £195,956, according to the report.
London, which maintains the U.K.’s highest average house price, had prices increase 1.5% on a yearly basis—the city’s first positive annual growth since January 2023—to an average of £536,996.
“The higher cost of borrowing does, of course, remain an obstacle for many buyers, but with a potential rate cut on the horizon, we expect market conditions to continue to improve as the year progresses,” said Jason Harris-Cohen, CEO of Open Property Group.
The numbers: Home prices in the 20 biggest U.S. metros rose for the 11th month in a row and hit a record high amid a persistent shortage of resale homes for sale.
The S&P CoreLogic Case-Shiller 20-city house price index rose 0.2% in December compared to the previous month.
Home prices in the 20 major U.S. metro markets were up 6.1% in the last 12 months ending in December.
A broader measure of home prices, the national index, rose 0.2% in December and was also up 5.5% over the past year. All numbers are seasonally adjusted.
The 20-city and the national index are at an all-time high.
Key details: San Diego posted the biggest year-over-year home-price gains in December. Prices were up 8.8%.
All 20 major markets reported yearly gains for the first time in 2023, S&P said.
Home prices rose the slowest in Portland, increasing by 0.3%.
| Cities | Change from last year |
| Atlanta | 6.3% |
| Boston | 7.2% |
| Charlotte | 8% |
| Chicago | 8.1% |
| Cleveland | 7.4% |
| Dallas | 2.1% |
| Denver | 2.3% |
| Detroit | 8.3% |
| Las Vegas | 4.2% |
| Los Angeles | 8.3% |
| Miami | 7.8% |
| Minneapolis | 2.9% |
| New York | 7.6% |
| Phoenix | 3.8% |
| Portland | 0.3% |
| San Diego | 8.8% |
| San Francisco | 3.2% |
| Seattle | 3% |
| Tampa | 4.1% |
| Washington | 5.1% |
| Composite-20 | 6.1% |
A separate report from the Federal Housing Finance Agency also showed home prices rose 0.1% in December from the last month, and were up 6.6% in the past year.
The FHA also noted that the housing market has experienced annual home price growth every quarter since the start of 2012.
The median price of a resale home was $382,600 in December 2023, and a newly built home was $413,200.
Big picture: Even though rates went to 8% in 2023 and dried up demand, that did not push down home prices significantly, per the Case-Shiller index. However early analysis of the data indicates that some markets are seeing home price declines.
But with the 30-year dropping below 7% in December, home prices may see a boost as demand picks up. And with a persistent and severe shortage of homes for sale, home prices could be pressured upwards again.
What S&P said: “Looking back at the year, 2023 appears to have exceeded average annual home price gains over the past 35 years,” Brian D. Luke, head of commodities, real & digital assets at S&P Dow Jones Indices, said in a statement.
“While we are not experiencing the double-digit gains seen in the previous two years, above-trend growth should be well received considering the rising costs of financing home mortgages,” he added.
And the company said it was able to see the early impact of higher rates on home prices. “Increased financing costs appeared to precipitate home price declines in the fourth quarter, as 15 markets saw lower values compared to September,” Luke noted.
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The numbers: Home prices in the 20 biggest U.S. metros rose for the tenth month in a row and hit a record high due to a low number of listed homes.
The S&P CoreLogic Case-Shiller 20-city house price index rose 0.1% in November compared to the previous month.
Home prices in the 20 major U.S. metro markets were up 5.4% in the last 12 months ending in November.
A broader measure of home prices, the national index, rose 0.2% in November and was also up 5.1% over the past year. All numbers are seasonally adjusted.
The 20-city and the national index are at an all-time high.
Key details: Detroit posted the biggest year-over-year home-price gains in November. Prices were up 8.2%. The city was the best performing real-estate market for the third month in a row.
Portland was the only city which saw home prices fall in November.
| Cities | Change from last year |
| Atlanta | 5.9% |
| Boston | 7.1% |
| Charlotte | 7% |
| Chicago | 7% |
| Cleveland | 7.4% |
| Dallas | 1.7% |
| Denver | 1.5% |
| Detroit | 8.2% |
| Las Vegas | 2.1% |
| Los Angeles | 7.2% |
| Miami | 7.2% |
| Minneapolis | 2.7% |
| New York | 7.4% |
| Phoenix | 2.5% |
| Portland | -0.7% |
| San Diego | 8% |
| San Francisco | 2% |
| Seattle | 1.6% |
| Tampa | 3.4% |
| Washington | 4.7% |
| Composite-20 | 5.4% |
A separate report from the Federal Housing Finance Agency also showed home prices rose 0.3% in November from the last month, and were up 6.6% in the past year.
Big picture: Even though mortgage rates were elevated between October and November — which sapped home-buying demand — the persistent and severe lack of supply of homes for sale has resulted in prices rising yet again.
With an imbalance between demand from home buyers and a reluctance among homeowners to sell and give up their ultra-low rate, the dynamic is likely to persist.
Particularly since rates have fallen since November and demand has ticked up, home prices will likely continue to march upwards into the new year.
What S&P said: “November’s year-over-year gain saw the largest growth in U.S. home prices in 2023, with our National Composite rising 5.1%,” Brian D. Luke, head of commodities, real and digital assets at S&P DJI, said in a statement.
Most markets are seeing home prices grow, he added. “The days of markets in the South rising double digits with markets in the Midwest remaining flat are over,” Luke said.
And with mortgage rates falling since November, that could “support further annual gains in home prices,” he added.
Looking ahead: “With mortgage rates now lower and spring home buying demand already lurking, home prices will continue to rise,” Selma Hepp, chief economist at CoreLogic, said in a statement.
That’s “especially considering the outsized pent-up demand for homes coming from young buyers, those who have been waiting for lower rates, and huge influx of immigrants over the last couple of years,” she added.
Market reaction: Stocks
DJIA
SPX
were up in early trading on Tuesday. The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was over 4%.
Home prices in November cooled after nine months of stronger gains. But some locales were still red hot.
Prices in November rose from the prior month at the slowest pace since February, according to the seasonally-adjusted S&P CoreLogic Case-Shiller Home Price Indices.
Seasonally adjusted home prices nationally inched up 0.24%, slower than October’s 0.59% month-over-month gain. Prices in an index tracking 20 of the nation’s large metropolitan areas increased a seasonally adjusted 0.15%, slower than the 0.63% gain one month prior.
In a sign of seasonality setting in, unadjusted prices dropped in November from October, with prices inching down 0.18% nationally, and declining 0.24% in an index tracking 20 large metropolitan areas. A month-over-month drop isn’t uncommon at this time of year: on average, national prices dip 0.05% from October to November, historic Case-Shiller data show.
In November, “U.S. home prices edged downward from their all-time high,” Brian D. Luke, head of commodities, real & digital assets at S&P Dow Jones Indices, said in a statement referring to the unadjusted data. “The streak of nine monthly gains ended in November, setting the index back to levels last seen over the summer months.”
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Some cities were still notching new highs, the data show. Unadjusted prices rose to the highest levels since at least 1987 in Miami, Tampa, Atlanta, Charlotte, New York, and Cleveland.
Prices nationally were 5.1% higher than one year prior, and were 5.4% higher in an index tracking 20 of the nation’s large cities. The 20-city gain was the largest since November 2023, but fell short of consensus expectations that called for a 5.7% increase, according to FactSet. Of the 20 cities tracked by the index, Portland was the only metro where prices remained lower than they were one year prior.
A low supply of homes for sale, combined with late 2022’s housing market correction, likely contributed to the strong year-over-year reading. There were 1.13 million previously owned homes for sale at the end of November, well below the prepandemic average of about 2.4 million, according to National Association of Realtors data.
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A drop in mortgage rates from October’s highs means home price gains could continue. “The rate has since fallen over 1%, which could support further annual gains in home prices,” Luke said.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
New home sales rose 4% in 2023—even as high mortgage rates and low supply buffeted the broader housing market.
New homes in December were sold at a seasonally adjusted annual rate of 664,000, up 8% from November’s upwardly revised rate of 615,000, according to Census data released Thursday. Economists had expected sales at a seasonally adjusted annual rate of 645,000, according to FactSet.
The…
New home sales rose 4% in 2023—even as high mortgage rates and low supply buffeted the broader housing market.
New homes in December were sold at a seasonally adjusted annual rate of 664,000, up 8% from November’s upwardly revised rate of 615,000, according to Census data released Thursday. Economists had expected sales at a seasonally adjusted annual rate of 645,000, according to FactSet.
The data caps out an unusual year for the housing market. Sales of previously owned homes, which make up the bulk of all house sales, fell 19% to 4.09 million, the National Association of Realtors said earlier this month—the lowest annual total in nearly 30 years. Sales of previously owned homes were hampered by rising mortgage rates and relatively low supply.
New home sales, meanwhile, expanded: there were 668,000 contracts signed to purchase new homes in 2023, the Census data show, up 4.2% from 2022’s levels. It was the first year-over-year expansion in new home sales since 2020, when they jumped as mortgage rates fell to historic lows and newly remote workers sought more space.
It’s not that builders were immune to broader housing market headwinds. Rather, companies were able to sell homes by offering incentives such as mortgage rate buydowns. Of the builders surveyed in January by the National Association of Home Builders, 62% offered sales incentives, a common theme from 2023 that has continued into the new year. While offering incentives can boost sales, it’s also a drag on profit margins.
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The picture for housing looks brighter in 2024.
said in its latest forecast that it expects mortgage rates to fall below 6% by the end of the year.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com