The US housing market continues to exhibit resilience, with home prices hitting new record highs in September, marking the eighth consecutive month of increases. This trend persists despite the headwinds of high mortgage rates and a historically low inventory.
Record Highs Amid Economic Uncertainty
Data from the S&P CoreLogic Case-Shiller US National Home Price Index indicates a 0.7% rise in home prices in September from the previous month, on a seasonally adjusted basis.
When compared to September 2022, the national composite index also showed an increase, with prices up by 3.9%. This year-to-date rise of 6.1% in the national composite, which covers all nine US census divisions, significantly surpasses the typical annual increase observed over the 35 years that S&P has tracked this data.
Craig Lazzara, managing director at S&P Dow Jones Indices, attributes this trend to a combination of high mortgage rates dampening home sales and a shortage of inventory bolstering prices. "Although this year's increase in mortgage rates has surely suppressed the quantity of homes sold, the relative shortage of inventory for sale has been a solid support for prices," Lazzara explained.
Regional Variations in Home Prices
The data shows notable regional differences in the trajectory of home prices. On a seasonally adjusted basis, all 20 cities in a separate index experienced price increases in September, with 17 cities reporting higher prices than in September 2022.
Cities such as Atlanta, Boston, Charlotte, Chicago, Cleveland, Detroit, Miami, New York, and Tampa have all seen their home prices reach all-time highs in September. In terms of year-over-year growth, Detroit led with a 6.7% increase, followed by San Diego at 6.5% and New York at 6.3%.
Conversely, Las Vegas, Phoenix, and Portland, Oregon, witnessed the most significant drops in prices compared to September 2022. The strongest regions were the Northeast and Midwest, each with price increases of more than 5% from the previous year.
In contrast, the West remains the weakest region, with prices falling from a year ago. The continued rise in home prices across various regions in the US reflects a complex housing market, where the interplay of economic factors like mortgage rates and inventory levels significantly influences pricing trends.
As the market navigates these ongoing challenges, the trajectory of home prices will be an important indicator of broader economic health and consumer confidence.