The S&P CoreLogic Case-Shiller National Home Price Index posted a yearly increase of 4.8% in October, the fastest annual rate gain of 2023 and 'the strongest national growth rate since 2022'
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October saw the highest home price increase of 2023, according to new data, despite mortgage rates also rising significantly that month.
The S&P CoreLogic Case-Shiller National Home Price Index posted a yearly increase of 4.8 percent and a monthly gain of 0.2 percent, an improvement from the rest of 2023.
“U.S. home prices accelerated at their fastest annual rate of the year in October,” Brian Luke, head of commodities, real and digital assets at S&P DJI said in a statement. “Our National Composite rose by 0.2 percent in October, marking nine consecutive monthly gains and the strongest national growth rate since 2022.”
The 10-city composite, which tracks price growth in Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco and Washington, D.C., posted an annual increase of 5.7 percent, up from a 4.8 percent increase the previous month, while the 20-city composite posted a 4.9 percent annual increase in October, up from a 3.9 percent increase in September.
Detroit recorded the highest year-over-year gain in the 20-city index, with an 8.1 percent increase in October, followed by San Diego which saw a 7.2 percent increase, and New York City with a 7.1 percent increase.
“We are experiencing broad-based home price appreciation across the country, with steady gains seen in nineteen of twenty cities,” Luke said. “This month’s report reflects trendline growth compared to historical returns and little disparity among cities and regions.”
The Federal Housing Finance Authority House Price Index, which was also updated on Tuesday, reported a 6.3 percent increase in home prices between October 2022 and October 2023, and a 0.3 percent bump between September and October.
“U.S. house price gains remained strong over the last 12 months.” said Dr. Nataliya Polkovnichenko, supervisory economist in FHFA’s Division of Research and Statistics. “On a monthly basis, price appreciation moderated in October, with four divisions exhibiting slowdowns from the previous month.”
This consistent price growth in October came despite a significant increase in mortgage rates during October, which made borrowing money prohibitively expensive for most aspiring homebuyers. The average rate of a 30-year fixed rate mortgage went above 8 percent during October according to Mortgage News Daily — the highest level seen in two decades.
Mortgage rates have receded noticeably towards the end of 2023, falling below 7 percent during December with anticipation of cuts to interest rates.
While home prices have continued to appreciate despite high mortgage rates, lower mortgage rates could lead to even more price growth.
“Home prices leaned into the highest mortgage rates recorded in this market cycle and continued to push higher,” Luke said. “With mortgage rates easing and the Federal Reserve guiding toward a slightly more accommodative stance, homeowners may be poised to see more appreciation.”
Home prices have risen 7 percent since the beginning of 2023, according to CoreLogic Chief Economist Selma Hepp, effectively erasing the losses recorded in the latter half of 2022.
“Home price gains in the CoreLogic S&P Case-Shiller Index have increased by 7 percent since the beginning of the year and are 1 percent higher than at the peak in 2022, recovering all losses recorded in the second half of 2022,” Hepp said. “Given the stronger seasonal gains seen in early 2023, annual home price appreciation should accelerate this winter before slowing again next year.”