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Home prices continued their upward ascent in September as a shortage of homes for sale drove prices higher.
National home prices climbed 3.9 percent from a year earlier, compared to a 2.5 percent annual increase the previous month, according to the S&P CoreLogic Case-Shiller National Home Price Index which was updated on Tuesday. After seasonal adjustment, the national index climbed 0.7 percent between August and September and is now 6.6 percent higher than its January levels, having increased for the past 7 months in a row.
“U.S. home prices continued their rally in September 2023,” says Craig J. Lazzara, managing director at S&P DJI. “On a year-to-date basis, the National Composite has risen 6.1 percent, which is well above the median full calendar year increase in more than 35 years of data. 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.”
S&P DJI
Home sales have fallen significantly since last year as mortgage rates have locked many potential buyers out of the market. But that hasn’t stopped home prices from continuing to climb as many would-be homesellers hold off on listing their homes to avoid losing their lower mortgage rates. This has caused a historic shortage in homes for sale, driving up prices.
In a separate dataset released Tuesday, the Federal Housing Finance Agency found that housing prices rose 5.5 percent between the third quarter of 2022 and the third quarter of 2023, and were up 2.1 percent between the second and third quarters of 2023.
“U.S. house price growth continued to accelerate in the third quarter, appreciating more than in each of the previous four quarters,” said Dr. Anju Vajja, Principal Associate Director in FHFA’s Division of Research and Statistics. “House prices rose in the third quarter in all census divisions and are higher than one year ago, driven primarily by a low supply of homes for sale.”
According to the S&P, the best-performing cities in September were Detroit — where prices climbed 6.7 percent over the year — followed by San Diego where they increased 6.5 percent, and New York City where they were up 6.3 percent.
“Unless higher rates or exogenous events lead to general economic weakness, the breadth and strength of this month’s report are consistent with an optimistic view of future results,” Lazzara said.
