Home prices hit another record high in September as stock shortages spurred competition for well-priced homes.
Year-over-year, prices rose 3.8%, up from 2.5% in August, according to the S&P CoreLogic Case-Shiller National Home Price NSA Index.
Prices were up 0.3% month-over-month before seasonal adjustment and 0.7% after. This is the eight straight month of increases.
Prices were up month-over-month in 15 of 20 cities, and both the 10- and 20-city composites analyzed saw prices exceed both their year-ago and January levels.
The National Composite surpassed its previous record high with this data, and ten individual cities hit record-breaking prices.
“On a year-to-date basis, the National Composite has risen 6.1%, 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,” said Craig Lazzara, managing director at S&P DJI.
“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.”
The latest Federal Housing Finance Agency House Price Index shows similar trends, with September prices up 0.6% from August, and 5.5% from Q2 to Q3.
“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.
Both reports attribute appreciation to the lack of homes for sale. The few buyers on the market are jockeying for the same listings, causing increases in low- and middle-priced homes while the most expensive homes see little competition.
Homebuilders continue to take advantage of market conditions, starting more single-family homes and applying for more permits in October than the month prior.
But they are also feeling the impact of higher short-term interest rates, which increase the cost of financing for builders and land developers.
The National Association of Home Builders predicts a 5% increase for single-family starts in 2024 as improving inflation data makes further Fed rate hikes less likely. More homes on the market should lead to moderating prices and more buyers.
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