U.S. home prices increased 0.4% in October compared with November and were up 7% compared with October 2022, according to First American’s most recent home price index report.
It was the seventh month in a row that home prices increased on a month-over-month basis.
“While the surge in long-term bond yields drove mortgage rates to 8 percent, sellers continued their ‘suppliers’ strike’ and continued to hold back housing supply,” says Mark Fleming, chief economist for First American, in the report. “Preliminary October sale prices continue to indicate that the lack of supply is constraining the market more than sinking affordability, which reached another record low last month.
“Nationally, when you can’t buy what’s not for sale, even if you can afford it with an 8 percent mortgage, it’s no surprise that house price appreciation continued for a seventh straight month,” he adds.
October saw surprising strength in luxury-tier prices in some markets.
“While resilient first-time home buyer demand and ongoing supply shortages kept price growth in the starter tier of the market strong, the luxury end of the market surprised with unexpected surges in price appreciation,” Fleming says. “Luxury-tier buyers typically already own homes and are trading up, despite taking on a mortgage rate on the home they purchase that is well above the rate on the home they sell. The robust luxury trade-up demand indicated by strong appreciation in markets like Anaheim, San Diego, Charlotte and Atlanta is a reminder that the lifestyle and non-financial reasons why people buy homes often supersedes the financial reasons why people buy homes.”
States that experienced strong annual home price growth in October included Pennsylvania (+8.1%), Florida (+4.4%), California (+4.0%), Texas (+3.8%), and New York (+2.9%).
Only one state saw a year-over-year decrease in the HPI: South Dakota (-5.1%).
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