US Markets
Tuesday, January 30th, 2024 3:26 pm EDT
Key Points
- Monthly Home Price Decline: In November, home prices experienced a 0.2% decrease from October, as reported by the S&P CoreLogic Case-Shiller national home price index. This marks the first monthly drop since January 2023.
- Impact of Rising Mortgage Rates: The decline in home prices coincided with a significant increase in mortgage rates in October, reaching their highest level in over two decades. This surge in rates, with the average Freddie Mac 30-year fixed-rate mortgage nearing 8%, contributed to making houses more challenging to afford for potential buyers.
- Regional Variations and National Trends: While Seattle and San Francisco reported the largest monthly price declines at 1.4% and 1.3%, respectively, six cities, including Miami, Tampa, Atlanta, Charlotte, New York, and Cleveland, reached new all-time highs in home prices in November. Nationally, despite the monthly drop, home prices were still higher than the previous year, with annual gains increasing to 5.1% from November 2022, up from a 4.7% annual increase in October. The 10-city composite rose 6.2%, and the 20-city composite rose 5.4%, indicating a national trend of continued home price appreciation. Additionally, the regional breakdown showed the narrowest price performance spread across the country since early 2021, suggesting a more uniform increase in home prices and less evidence of micro-markets deviating from the overall rising trend.
In November, the S&P CoreLogic Case-Shiller national home price index recorded a 0.2% decline from October, marking the first monthly drop since January 2023. While seemingly modest, this dip is significant, and it comes on the heels of a sharp rise in mortgage rates in October, reaching their highest levels in over 20 years, making homes less affordable for prospective buyers. Notably, Seattle and San Francisco reported the largest monthly price declines, falling 1.4% and 1.3%, respectively. However, six cities, including Miami, Tampa, Atlanta, Charlotte, New York, and Cleveland, saw new all-time highs in home prices in November.
Despite the monthly decline, national home prices remained higher than the previous year, with annual gains increasing relative to the prior month. Prices rose by 5.1% from November 2022, up from a 4.7% annual increase in October. The 10-city composite showed a 6.2% increase, compared to a 5.7% rise in the previous month, and the 20-city composite rose 5.4%, up from a 4.9% increase in October.
Brian Luke, head of commodities, real & digital assets at S&P DJI, noted that the decline in house prices coincided with a peak in mortgage rates, with the average Freddie Mac 30-year fixed-rate mortgage approaching 8%, according to Federal Reserve data. However, rates have since fallen by over 1%, potentially supporting further annual gains in home prices.
For the second consecutive month, Detroit reported the highest year-over-year gain among the 20 cities, with prices rising by 8.2% in November. San Diego followed closely with an 8% increase. Conversely, Portland, Oregon, was the only city where prices were lower than the previous year, experiencing a 0.7% decline compared to November 2022.
The regional breakdown in the November report revealed the narrowest price performance spread across the country since early 2021. This trend suggests a more uniform increase in home prices, indicating a diminishing presence of micro-markets that deviate from the overall upward trajectory. Brian Luke emphasized that the days of certain regions experiencing double-digit price rises while others remain flat seem to be waning.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/01/30/home-prices-november-sp-case-shiller.html
