Case-Shiller: Home Prices Continued to Rise Steadily in December


U.S. home prices increased 0.2% on an adjusted basis in December compared with November and were up 5.5% compared with December 2022, as the monthly gains settled into a more steady pattern, according to the S&P CoreLogic Case-Shiller home price index.

The index’s 10-city and 20-city composites – measuring home prices in the 20 largest U.S. metros – each posted a month-over-month increase of 0.2%.

Year-over-year, the 10-city composite showed an increase of 7.0%, up from a 6.3% increase in the previous month. The 20-city composite posted a year-over-year increase of 6.1%, up from 5.4% the previous month

San Diego reported the highest year-over-year gain among the 20 cities, with an 8.8% It was followed by Los Angeles and Detroit, each with an 8.3% increase.

Portland showed a 0.3% increase, holding the lowest rank after reporting the smallest year-over-year growth.

The report shows that home price appreciation continued to slow: Seventeen of the 20 major metro markets reported month-over-month price decreases.

“U.S. home prices faced significant headwinds in the fourth quarter of 2023,” says Brian D. Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, in a statement. “However, on a seasonally adjusted basis, the [index] continued its streak of seven consecutive record highs in 2023. Ten of 20 markets beat prior records, with San Diego registering an 8.9 percent gain and Las Vegas the fastest rising market in December, after accounting for seasonal impacts.”

Luke adds that in 2023 “U.S. housing gains haven’t followed such a synchronous pattern since the COVID housing boom.”

“The term ‘a rising tide lifts all boats’ seems appropriate given broad-based performance in the U.S. housing sector,” he says. “All 20 markets reported yearly gains for the first time this year, with four markets rising over 8 percent. Portland eked out a positive annual gain after 11 months of declines. Regionally, the Midwest and Northeast both experienced the greatest annual appreciation with 6.7 percent.”

“Looking back at the year, 2023 appears to have exceeded average annual home price gains over the past 35 years,” Luke says. “With trend growth at the national level of 4.7 percent, a 5.5 percent return demonstrates solid, steady growth.”

“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 says. “We previously suggested that the surge in home prices during the COVID pandemic could have accelerated home ownership temporarily. The past two years reflect consistent growth slightly above trend, suggesting a more secular shift in home ownership post pandemic.

“In the short term, meanwhile, we should be able to measure the impact of higher mortgage rates on home prices,” he adds. “Increased financing costs appeared to precipitate home price declines in the fourth quarter, as 15 markets saw lower values compared to September.”

In a separate statement, Selma Hepp, chief economist for CoreLogic, says although home prices increased 5.5% year-over-year in December, “the stress of high mortgage rates at the end of 2023 continued to depress prices, which were down 0.4 percent [on an unadjusted basis] compared to November – the second month of lower prices.”

“Nevertheless, Miami and Las Vegas – joined by Los Angeles – continued to see strengthening of home prices despite higher rates,” Hepp says. “Miami overall ranked as the strongest appreciating market in 2023, up 6 percent for the year, compared to national appreciation of 2 percent. In 2022, Tampa and Miami were the strongest appreciating markets at almost 30 percent increase in home prices. In contrast, markets in the West – San Francsico, Seattle, Las Vegas, Phoenix, and Portland – are still catching up with 2022 price peaks. But with strong recent price rebounds in Las Vegas and Phoenix in 2023, these two markets are likely to see annual appreciation in 2024.”

Photo: Kostiantyn Li

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