Despite higher mortgage rates, U.S. home prices continued to rise in March, increasing 0.3% on a seasonally adjusted basis compared with February and up 6.5% compared with April 2023, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.
The index’s 20-city and 10-city composites, measuring home price growth in the 20 largest U.S. cities, saw month-over-month increases of 0.3% and 0.5%, respectively.
Year over year, the 10-city composite saw an increase of 8.2% while the 20-city composite saw an increase of 7.4%.
San Diego continued to report the highest year-over-year gain among the 20 cities this month with an 11.1% increase in March, followed by New York and Cleveland, with increases of 9.2% and 8.8%, respectively. Denver holds the lowest rank this month for the smallest year-over-year growth, with a 2.1% annual increase in March.
“This month’s report boasts another all-time high,” says Brian D. Luke, head of commodities, real & digital assets at S&P Dow Jones Indices, in a statement. “We’ve witnessed records repeatedly break in both stock and housing markets over the past year. Our National Index has reached new highs in six of the last 12 months. During that time, we’ve seen record stock market performance, with the S&P 500 hitting fresh all-time highs for 35 trading days in the past year.
“San Diego stands out with an impressive 11.1 percent annual gain, followed closely by New York, Cleveland, and Los Angeles, indicating a strong demand for urban markets,” Luke says. “The two largest population centers make up about 30 percent of the 20-city composite and have shown significant recovery, keeping pace with our national composite annualized return of 9.9 percent since 2020. San Francisco and Seattle are still trailing previous highs, currently 9.7 percent and 8.2 percent lower than in May 2022, respectively. While Southern California ranked among the best annually, Seattle and San Francisco recorded the strongest monthly gains.
“Regionally, the Northeast remains the top performer with an 8.3 percent annual gain, showcasing robust growth compared to other metro markets,” he adds. “Conversely, cities like Tampa, Phoenix, and Dallas, which saw top-tier performance in 2020 and 2021, are now growing at a slower pace. COVID was a boom for Sunbelt markets, but the bigger gains the last couple of years have been the northern metro cities.
“On a seasonal adjusted basis, national home prices have reached their ninth all-time high within the past year, with all 20 metropolitan markets posting positive annual gains for the fourth consecutive month, indicating widespread and sustained growth in the housing sector.”
Selma Hepp, chief economist for CoreLogic, says while home price growth flattened at 6.5% in March, “seasonal price increases continued to push well beyond pre-pandemic levels, up 1.3 percent – compared to a 0.8 percent pre-pandemic average.”
“Continued home price resiliency amid surging borrowing costs highlights headwinds for the housing market reflected in slow sales activity, namely affordability challenges for potential homebuyers as cost of homeownership continue to skyrocket, particularly homeowners’ insurance and property tax increases,” Hepp says in a statement. “While these costs are driving some sellers and investors to let go of homes, and improving inventory shortages, buyers are maintaining the wait-and-see approach in anticipation of lower rates down the road.
“Nevertheless, it will be important to see how these non-mortgage costs affect potential homebuyers and existing homeowners longer term, particularly homeowners with fixed incomes,” Hepp adds. “Weakness in low tier home prices in Tampa highlight some of the potential challenges. In contrast, markets in proximity to major employment centers, such as Seattle, Boston, and New York which have benefited from strong labor markets and ensuing wage and wealth gains are helping drive the demand while lack of homes for sale and new construction are putting pressure on prices in these markets.”
In a separate statement, Max Slyusarchuk, founder and CEO of A&D Mortgage, says home prices continue to remain strong “due to a scarcity of homes for sale.”
“However, homebuilder confidence is strong enough to continue building homes, but we hear in some markets that homebuilders still need to offer concessions, such as points buydowns, to secure many home purchases,” Slyusarchuk says.
Photo: Kostiantyn Li
