U.S. home prices continued to increase in September – albeit at a slower pace – rising 0.7% compared with August and up 3.9% compared with September 2022, 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. cities – each increased 0.7% compared with the previous month.
Year-over-year, the 10-city composite showed an increase of 4.8%, up from a 3.0% increase the previous month, while the 20-city composite posted a year-over-year increase of 3.9%, up from a 2.1% increase the previous month.
Fifteen of the 20 major metro markets reported month-over- month price increases. Detroit surpassed Chicago, reporting the highest year-over-year gain at 6.7%, followed by San Diego at 6.5%.
“U.S. home prices continued their rally in September 2023,” says Craig J. Lazzara, managing director at S&P DJI. “Our National Composite rose by 0.3 percent in September, marking eight consecutive monthly gains since prices bottomed in January 2023. The composite now stands 3.9% above its year-ago level and 6.6% above its January level. Our 10- and 20-city composites both rose in September, and likewise currently exceed their year-ago and January levels.”
Lazzara says the housing market’s strength “continued to be impressive.”
“On a seasonally adjusted basis, all 20 cities showed price increases in September; before seasonal adjustments, 15 rose,” he says. “Prices in 17 of the cities are higher than they were in September 2022. Notably, the National Composite, the 10-City Composite, and 10 individual cities – Atlanta, Boston, Charlotte, Chicago, Cleveland, Detroit, Miami, New York, Tampa, and Washington – stand at their all-time highs.
“Although this year’s increase in mortgage rates has surely suppressed the quantity of homes sold, the relative shortage of inventory for sale has been a solid support for prices,” Lazzara notes. “Unless higher rates or exogenous events lead to general economic weakness, the breadth and strength of this month’s report are consistent with an optimistic view of future results.”
In a separate statement, Selma Hepp, chief economist for CoreLogic, explains that home prices have increased drastically, especially when compared to the current high borrowing rates.
“Speeding up of annual home price growth reflects much of the pent-up demand that exists in the housing market amid very low inventories,” Hepp says. “Also, recent robust price appreciation in some of the largest metro areas, such as Los Angeles, Boston, New York, and Miami are contributing to overall strength of the national price surge and reflect continued migration patterns that motivate price trends in many parts of the country.
“Nevertheless, home prices are feeling the weight of high mortgage rates which will slow the rate of price growth in the coming months,” Hepp adds. “Still, despite the dramatic increase in cost of homeownership, home prices have risen 6.4 percent so far this year – meaningfully beyond expectations given the rise in borrowing costs.”
Photo: Kostiantyn Li