US Home Prices Show 3.9 Percent Yearly Growth in S&P CoreLogic Case-Shiller Reports
The housing market is currently finding a balance between the demand for new homes, limited supply, and high interest rates.
Home price gains in September were moderate, with the growth rate slowing down, particularly in the South, as per a recent report from S&P Global.
The S&P CoreLogic Case-Shiller U.S. National Home Price index increased by 3.9 percent year over year in September, lower than the 4.3 percent gain in August, according to a Nov. 26 statement. The index tracks single-family home price changes across nine U.S. Census divisions. The growth rate also slowed for both the 10-city and 20-city indexes in September.
According to Brian D. Luke, head of commodities, real, and digital assets at S&P, “Home price growth stalled in the third quarter after a consistent start to 2024. Above-trend price growth was observed in the Northeast and Midwest, growing 5.7 percent and 5.4 percent, respectively, led by New York, Cleveland, and Chicago.”
Lisa Sturtevant, chief economist at Bright MLS, pointed out in a commentary on Nov. 27 that the 3.9 percent gain in September was the lowest annual increase since August 2023.
The lack of supply has been supporting home prices, but as more properties enter the market, price gains may slow down in the fourth quarter and into 2025, as noted by the economist. Existing home inventories have been increasing for 11 consecutive months.
Dorian Sadellari, founder of Alliance Business Advisors, mentioned in a post on Nov. 26 that the slowdown in annual home price gains suggests a potential recalibration in the housing market could be underway.
The index traditionally shows an increase in home price growth between August and September, Sturtevant stated. This year, the data for September could indicate a slowdown in home price appreciation in the coming months.
“This data portrays a market in transition—balancing slower price appreciation with steady demand. It’s essential to monitor this trend closely for broader housing implications and potential policy adjustments,” he wrote.
Housing Market Situation
In October, home prices saw their 12th consecutive monthly increase, as per a recent report by real estate brokerage Redfin. While high mortgage rates are hindering home price growth, the shortage of properties for sale continues to buoy prices.
Redfin Senior Economist Sheharyar Bokhari stated, “Many people, especially first-time buyers, were waiting until after the election to make a decision about buying a home. Now that the election is over, we are starting to see signs of returning homebuyer demand. This could lead to increased competition in the coming months, potentially driving prices higher unless there is a significant increase in available homes for sale.”
Mortgage rates declined in September but have since rebounded. The average weekly rate for a 30-year fixed-rate mortgage remains close to 7 percent.
Sam Khater, chief economist at Freddie Mac, mentioned that rates have mostly stayed stable in recent weeks, with markets waiting for more clarity on economic policies.
“Potential homebuyers are also holding off, leading to lackluster demand,” he said. “Despite sluggish sales activity, inventory has only slightly increased and remains significantly undersupplied.”
Data from the U.S. Census Bureau revealed that sales of new single-family homes dropped by 17.3 percent in October from the previous month, hitting the lowest level in nearly two years.
Carl Harris, chairman of the National Association of Home Builders (NAHB), indicated that the decline reflects a slowdown in buyer activity amidst broader economic uncertainty.
According to Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis, elevated rates and high home prices are continuing to pose challenges for potential buyers.
“Despite these obstacles, including increased material costs for builders, new construction remains crucial, particularly in areas with limited existing home inventory,” she said.
