Case-Shiller: Home Prices Continue to Trend Upward In January

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6% annual gain in January, up from a 5.6% rise in the previous month. The data released March 26 shows that three out of the 20 major metro markets reported month-over-month price increases. The 10-City Composite showed an increase of 7.4%, up from a 7% increase in the previous month. The 20-City Composite posted a year-over-year increase of 6.6%, up from a 6.2% increase the month prior. 

San Diego again reported the highest year-over-year gain among the 20 cities with an 11.2% increase in January, followed by Los Angeles, with an increase of 8.6%. Portland, though holding the lowest rank after reporting the smallest year-over-year growth, retained an upward trend with a 0.9% increase this month.

“U.S. home prices continued their drive higher,” says Brian D. Luke, head of commodities, real & digital assets at S&P Dow Jones Indices. “Our National Composite rose by 6% in January, the fastest annual rate since 2022. Stronger gains came from our 10- and 20-City Composite indices, rising 7.4% and 6.6%, respectively. For the second consecutive month, all cities reported increases in annual prices, with San Diego surging 11.2%. On a seasonal adjusted basis, home prices have continued to break through previous all-time highs set last year.

“We’ve commented on how consistent each market performed during 2023, and that continues to be the case. While there is a large disparity between leaders such as San Diego versus laggards such as Portland, the broad market performance is tightly bunched up. This is also true of high and low tiers. The average annual gains between high and low tiers across cities tracked by the indices is just 1.1%. Low price tiered indices have outperformed high priced indices for 17 months. Homeowners most likely saw healthy gains in the last year, no matter what city you were in, or if it was in an expensive or inexpensive neighborhood. No matter which way you slice it, the index performance closely resembled the broad market.

“On a monthly basis, home prices continue to struggle in the face of elevated borrowing costs. Seventeen markets dropped over the last month, while Minneapolis has posted a 2.4% decline over the prior three months. Only Southern California and Washington, D.C., have stood up to the rising wave of interest rates and delivered positive returns to start the year. San Diego rose 1.8% in January, followed by D.C. with 0.5% and Los Angeles at 0.1%.”

Bright MLS Chief Economist Dr. Lisa Sturtevant had the following comments on the results:

“Housing affordability is a major concern for many prospective homebuyers, with high home prices keeping some would-be buyers out of the market altogether. Despite recent reporting on REALTOR® commissions, economic fundamentals explain why home prices continue to rise. There are simply too few homes available for sale to meet demand.

“Supply is loosening up in some markets, which will provide some relief to homebuyers this spring and will ease upward pressure on home prices. However, we are unlikely to see any significant price drops in most markets because demand remains strong. A sharp economic downturn or spike in mortgage rates—neither of which are likely—are the only factors that could dramatically reduce the number of homebuyers in the market.”

And this from®’s Hannah Jones, senior economic research analyst:

“Despite improvements in for-sale inventory, buyers saw nearly 40% fewer homes for sale than pre-pandemic, which kept upward pressure on home prices, which grew annually in all 20 markets. Although year-over-year gains picked up, this was largely due to weaker data one year ago. Month-to-month, seasonally adjusted price growth was 0.4%, 0.1% and 0.2% across the national, 10- and 20-city composite indices, respectively. 

“Moving into the spring, buyers and sellers alike are looking for ways to seize any opportunity today’s challenging market offers. Buyers face still-high prices and mortgage rates, as well as historically low inventory levels, but for-sale options are improving and are expected to continue to climb seasonally through the spring and summer. Sellers are nearing the best time to sell, and are set up for success as buyers are eager for fresh, well-priced options.”

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