US home prices hit another record high in October
(CNN) - US home prices continued to rise in October, hitting a new record high and marking the ninth consecutive month of increases, according to data released Tuesday. Together with soaring mortgage rates that month, rising home prices have made this the least affordable housing market in a generation.
Even as mortgage rates lingered above 7 percent in October, reaching the highest levels in 23 years, historically low inventory continued to push up the price of a home.
Prices rose 0.6 percent from the month before, according to seasonally adjusted data from the S&P CoreLogic Case-Shiller US National Home Price Index.
Compared to a year ago, the national composite index covering all nine U.S. census divisions reported a 4.8 percent annual change in October from the year before, up from a 4 percent change in the previous month.
"U.S. home prices accelerated at their fastest annual rate of the year in October," said Brian D. Luke, head of commodities, real and digital assets at S&P DJI in a statement.
This marked the strongest national growth rate since 2022.
Part of the reason prices have climbed was because of stubbornly low inventory. People that could absorb higher mortgage rates or who were paying cash competed for the few homes available. Combined with the fear from many buyers that if they don't buy now, interest rates could increase even more, prices moved higher.
Where are home prices going up?
Each index - the 10-city, 20-city and National Index - remained at all-time highs, with eight of 20 cities registering all-time highs: Miami, Atlanta, Chicago, Boston, Detroit, Charlotte, New York and Cleveland.
Detroit kept pace as the fastest growing market for the second month in a row, registering an 8.1% annual gain.
San Diego followed with 7.2% annual gains, and New York with a 7.1% gain.
"We are experiencing broad-based home price appreciation across the country, with steady gains seen in 19 of 20 cities," said Luke. "This month's report reflects trendline growth compared to historical returns and little disparity among cities."
The Midwest and the Northeast regions are the fastest growing markets, while the Southwest and West have lagged behind other regions for over a year.
"This month's index reflects a rising tide across nearly all markets," said Luke.
October's index data tracks August, September and October, a period through which mortgage rates climbed sharply from 6.9% in August to 7.79% by the end of October.
Existing home sales fell to a new 13-year low in October as soaring mortgage rates cut into purchasing power for many buyers, said Danielle Hale, chief economist for Realtor.com, in a statement.
"Shoppers who could successfully navigate rising costs were likely well-qualified, and amid limited inventory and a sense that mortgage rates might continue to rise, pushed home prices higher," Hale noted.
Home prices expected to stay strong in 2024
The 2023 housing market is closing in a more positive situation than expected only one month ago, said Selma Hepp, CoreLogic's chief economist in statement.
While typical mortgage rates were at their highest level in 23 years, hitting 7.79% at the end of October, according to Freddie Mac, rates have come down considerably since then. The average rate for a 30-year, fixed-rate loan was 6.67% last week, the lowest level since June.
"With mortgage rates dropping, demand for homes in early 2024 is likely to be strong and will again put pressure on prices, similar to trends observed in early 2023," said Hepp.
Home price gains in the CoreLogic S&P Case-Shiller Index have increased by 7% since the beginning of the year and are 1% higher than at the peak in 2022, recovering all losses recorded in the second half of 2022.
"Still, most markets will continue to reach new home price highs over the course of 2024," said Hepp.
