S&P CoreLogic Case-Shiller Index Reports 3.6% Yearly Increase in Home Prices
The U.S. Census Bureau reports a yearly construction spending increase of 3.2 percent.
In October 2024, home prices surged across the United States, with New York, Chicago, and Las Vegas leading the way in price appreciation, as noted by financial services firm S&P Global.
Brian D. Luke, head of commodities-real and digital assets, stated, “While annual returns continue to demonstrate positive inflation-adjusted growth, they fall short of the substantial gains witnessed throughout this decade.”
“Florida and Arizona markets are experiencing upward trends; however, they are not keeping pace with inflation and have notably decreased from the over 10 percent annual gains recorded from 2020 onwards. This has allowed other markets to make significant strides,” he explained.
Among the 20 cities tracked by the company, New York experienced the highest annual increase at 7.3 percent in October, followed by significant gains in Chicago and Las Vegas.
New York’s annual returns were more than twice the national average, as Luke observed, with the city achieving the most significant annual price increases in the last six months, after San Diego held the lead in the previous six months.
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“We anticipate home prices will continue their steady rise throughout 2025 at a pace similar to this year,” remarked Redfin senior economist Sheharyar Bokhari.
Construction Activity and Mortgage Rate Challenges
This price increase coincides with a 3.2 percent rise in residential construction spending in November year-over-year, as per U.S. Census Bureau data.
Public residential construction saw the largest increase at 12.2 percent, while private construction rose by 3.1 percent. Notably, within private construction, spending on new single-family and multifamily developments experienced annual declines.
“Regulatory burdens must be eased, permitting obstacles removed, and career paths in skilled trades encouraged by policymakers at all government levels to facilitate the construction of more homes and apartments nationwide,” he stated.
Persistent high mortgage rates are suppressing interest from potential homebuyers, leading builders to be cautious about new constructions.
Temporary reductions in rates may occur, offering potential buyers opportunities, according to Fannie Mae chief economist Mark Palim. However, the outlook for buyers is not entirely bleak.
“While we expect ongoing affordability challenges to persist, we foresee nominal wage growth outpacing home price growth for the first time in over a decade in 2025, which will gradually provide relief for potential homebuyers,” he stated.
