Case-Shiller: Home Price Appreciation Slowed Further in November as Mortgage Interest Rates Peaked

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U.S. home prices continued to increase in November, despite a rising mortgage rates and the slowest home sales in decades. 

According to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, home prices increased 0.2%, on an adjusted basis, compared with October and were up 5.1% compared with November 2022.

The index’s 10-city and 20-city composites, measuring home prices in the 20 largest U.S. cities, posted adjusted monthly increases of 0.2% and 0.1%, respectively.

However, on an unadjusted basis home prices decreased slightly month-over-month, indicating that home price appreciation slowed. The national index and 20-city composite each decreased 0.2%, while the 10-city composite decreased 0.1%.

Once again, Detroit reported the highest year-over-year gain among the 20 cities with an 8.2% increase in November, followed again by San Diego with an 8% increase.

For the third month in a row, Portland fell 0.7% and remained the only city reporting lower prices in November versus a year ago.

“U.S. home prices edged downward from their all-time high in November,” says Brian D. Luke, head of commodities, real and digital assets at S&P DJI, in a statement. “The streak of nine monthly gains ended in November, setting the index back to levels last seen over the summer months.

“Seattle and San Francisco reported the largest monthly declines, falling 1.4% and 1.3%, respectively,” Luke adds.

“Detroit held its position as the best performing market for the third month in a row, accelerating to an 8.2 percent gain,” Luke says. “San Diego notched an 8 percent annual gain, retaining its second spot in the nation. Barring a late surge from another market, those cities will vie for the ‘housing market of the year’ as the best performing city in our composite.

“This month’s report revealed the narrowest spread of performance across the nation since the first quarter of 2021,” he says. “The tight disparity speaks to a rising tide across the country, with less evidence of micro-markets bucking the trend. The days of markets in the South rising double digits with markets in the Midwest remaining flat are over. The house price decline came at a time where mortgage rates peaked, with the average Freddie Mac 30-year fixed rate mortgage nearing 8 percent, according to Federal Reserve data. The rate has since fallen over 1 percent, which could support further annual gains in home prices.”

“Home price growth continued to accelerate through the winter and registered solid monthly gains despite mortgage rate surge before the Fed December meeting which weighed heavily on already existing affordability challenges,” says Selma Hepp, chief economist for CoreLogic, in a separate statement.” With mortgage rates now lower and spring home buying demand already lurking, home prices will continue to rise, 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.”

Photo: Tierra Mallorca

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