US home prices soared to a new all-time high in December, marking the 11th consecutive month of increases in the 20 largest metro areas across the country. The S&P CoreLogic Case-Shiller US National Home Price Index reported a 0.2% rise from the previous month, indicating a sustained upward trend in the housing market.
Year-over-year data also revealed a substantial 5.5% increase in national home prices compared to December 2022, surpassing the 5% annual gain recorded in November. Notably, half of the 20 metro markets surpassed their previous price records, with Las Vegas emerging as the fastest growing market in December, factoring in seasonal influences.
Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, acknowledged the challenges faced by US home prices in the fourth quarter of 2023. However, he highlighted the overall resilience of the housing sector, attributing the solid price growth to a broader market recovery following a period of decline driven by surging interest rates and high inflation.
The positive momentum extended across all 20 markets, with annual gains reported for the first time this year, including four markets experiencing growth rates exceeding 8%. Even Portland, Oregon, which had previously witnessed 11 months of declines, observed year-over-year growth. The Midwest and Northeast regions led in annual appreciation, each recording a 6.7% increase.
While the escalating prices bode well for homeowners, Bill Adams, chief economist for Comerica Bank, emphasized the peculiar dynamics of the current housing market. He noted that limited supply, influenced by homeowners holding onto properties due to favorable mortgage rates and tax assessments, has intersected with subdued demand resulting from high mortgage rates and affordability challenges.
Adams pointed out that despite the constrained supply and demand, the equilibrium in the market is more balanced compared to the frenzied conditions of 2020 and 2021, reflecting a more normalized scenario.
Looking ahead, experts anticipate a continued upward trajectory in prices, albeit at a slower pace. The sustained growth in home prices has not only bolstered household wealth for homeowners but also contributed to an improved consumer sentiment, providing a silver lining amidst the complex dynamics of the current housing landscape.
