US home prices rose nearly 5% in October from the same month a year ago, data out Tuesday showed.
The 4.9% YoY increase on the Case-Shiller 20-City Index matched expectations and underscored the extent to which supply and demand remained out of balance as the highest mortgage rates in decades kept badly-needed inventory off the market.
The national gauge rose 4.77% in October, much quicker than the prior month.
That index, you’re reminded, began making new highs months ago, a testament to the notion that at least as far as the housing market goes, high rates may be working at cross-purposes with the Fed’s inflation-fighting efforts as the impact on supply more than offsets any disinflationary impulse from constrained demand.
“US home prices accelerated at their fastest annual rate of the year in October,” Brian Luke, Head of Commodities, Real & Digital assets at S&P Dow Jones said Tuesday. “We are experiencing broad based home price appreciation across the country, with steady gains seen in nineteen of twenty cities.”
Sales and builder sentiment data released earlier this month painted a mixed picture. The sharp decline in mortgage rates from the highs in October is broadly expected to support demand, but affordability remains challenging.
New home prices are down dramatically from the highs, but property values remain around 30% higher versus pre-pandemic levels. It’s unclear when, or even if, buyers will see any price relief for existing properties.
The FHFA update for October, also released on Tuesday, showed prices rose 6.3% YoY, even as the MoM increase, at 0.3%, was cooler than expected. “US house price gains remained strong over the last 12 months,” Nataliya Polkovnichenko, an economist in FHFA’s research division remarked. “On a monthly basis, price appreciation moderated in October, with four divisions exhibiting slowdowns from the previous month.”
According to a Redfin article published late last week, just 16% of listings were affordable for the average household in 2023, which Lily Katz noted was “the lowest share on record, down from 21% in 2022 and over 40% before the pandemic homebuying boom.”
