National Home Prices Increase by 5.1% Annually
In November, home prices in the United States rose for the 10th month in a row, as the housing inventory continued to suffer from a shortage. According to the S&P CoreLogic Case-Shiller index, prices increased by 5.1% nationally compared to the previous year, surpassing the 4.7% annual increase recorded the prior month. On a monthly basis, prices saw a 0.2% rise when adjusted for seasonal factors.
City Composites Display Varied Price Gains
The 10-city composite, which includes major cities like Los Angeles, Miami, and New York, experienced a 6.2% annual increase, while the 20-city composite, which also tracks housing prices in Dallas and Seattle, saw a gain of 5.4%. These figures mark an improvement from the previous month’s 5.7% and 4.9% respectively.
Leading Performers and All-Time Highs
Among the 20 cities, Detroit boasted the highest annual gain with 8.2%, followed by San Diego with an 8% increase. According to Brian Luke, the head of commodities, real and digital assets at S&P DJI, these cities are in contention for the title of “housing market of the year” within the composite. Additionally, November saw six cities, including Miami, Tampa, and New York, reach new all-time high prices. The only city to experience a decline was Portland, with a 0.7% drop from the prior year.
Affordability Crisis Expected to Drive Further Price Surges
Experts predict that home prices could surge even higher in the coming months as the affordability crisis worsens. The limited supply of homes, combined with mortgage rates near their highest levels in two decades, has created fierce competition among buyers. Many sellers who secured low mortgage rates before the pandemic are now reluctant to sell, exacerbating the inventory shortage.
Delayed Reporting and Market Dynamics
It’s important to note that the Case-Shiller index reports with a two-month delay, which means it may not capture the most recent market trends. The housing market experienced a slowdown in the aftermath of the Federal Reserve’s aggressive interest-rate hike campaign. However, prices have since rebounded as buyers adapt to higher mortgage rates and the scarcity of available homes. Unfortunately, this issue is unlikely to be resolved in the near future.
Inventory Shortage Persists
Despite a recent decline in mortgage rates, the supply of available homes is still down by a staggering 34.3% compared to pre-pandemic levels in early 2020. This shortage poses a significant challenge for eager prospective buyers, leaving them with limited options in the market.
Source: Realtor.com