US home prices reached a new record high in January, rising at the fastest rate in months. The S&P CoreLogic Case-Shiller US National Home Price index increased by 6% from the previous year, marking the highest annual increase since late 2022. This surge in prices can be attributed to a combination of a housing shortage and high mortgage rates, which continue to impact affordability. All cities reported increases in annual prices, with San Diego leading the way with a 11.2% increase.
Despite the overall increase in home prices, interest rates and borrowing costs at decades-high levels have tempered price growth, especially in the nation’s largest metro areas. On a seasonally adjusted basis, home prices have surpassed previous all-time highs set last year. However, on a month-over-month basis, prices rose by 0.4%, with the S&P CoreLogic’s 20-City Composite index recording a slower pace of growth at 0.1%, the slowest since February of the previous year.
When excluding seasonal adjustments, 17 of the 20 metro areas saw price declines from December to January. San Diego, Los Angeles, and Washington, DC were exceptions with positive gains. Minneapolis experienced a decline of 2.4% in home prices during the three months ending in January. The 30-year fixed-rate mortgage averaged 6.87% in the week ending March 21st, according to data from Freddie Mac. This ongoing trend in the housing market is subject to change, with updates to follow as the story continues to develop.
In conclusion, the housing market in the United States is experiencing record high prices driven by a shortage of inventory and high mortgage rates. Despite this, some areas are seeing declines in home prices due to increased borrowing costs. It will be important to monitor the market as it continues to evolve and respond to changing economic conditions.
