Home prices rose in April for a third consecutive month, according to the latest S&P CoreLogic Case-Shiller US National Home Price Index released Tuesday.
After seasonal adjustment, the national index rose 0.5% in April from March. Both the 10-City and 20-City composites saw increases, too, rising 1% and 0.9%, respectively. Before seasonal adjustments, the national index rose 1.3% from March. April’s increase comes after an uptick in February that snapped a seven-month streak of month-over-month declines.
“The US housing market continued to strengthen in April 2023,” said Craig Lazzara, managing director at S&P DJI. “If I were trying to make a case that the decline in home prices that began in June 2022 had definitively ended in January 2023, April’s data would bolster my argument.”
The recovery, Lazzara said, is broad-based: On a non-seasonally adjusted basis, prices rose in all 20 of the major cities tracked by the index, and when looking at seasonally adjusted data, all rose except for the Phoenix market, which as slightly down.
He added: “Whether we see further support for that view in coming months will depend on how well the market navigates the challenges posed by current mortgage rates and the continuing possibility of economic weakness.”
The 30-year fixed-rate mortgage averaged 6.67% for the week ending June 22, according to data released last week by Freddie Mac.
On an annual basis, however, home prices fell 0.2% — the first yearly drop since 2012, according to the S&P report.
This time last year, home prices were continuing a hot streak of three consecutive months of more than 20% annual gains, a surge that would eventually peak in June 2022.
However, it was a flashpoint of a housing market in transition. In March 2022, the Federal Reserve enacted the first of what would be a string of 10 consecutive interest rate hikes, throwing ice cold water over the housing market and other rate-sensitive industries in an attempt to combat decades-high inflation.
Low inventory is keeping prices strong
Although mortgage rates have risen since last year, prices remain strong in part because there are fewer options available for those who can still afford to buy.
Low housing inventory creates competition and pushes prices up.
May’s home price index “reinforced the idea that home prices are responsive to interest rate adjustments, as home shoppers continue to push budget boundaries in today’s pricey housing market,” said Danielle Hale, Realtor.com’s chief economist.
“Home price trends are caught in a tug of war between stretched buyer budgets and limited inventory forcing competition despite reduced affordability. With high mortgage rates keeping 1 in 7 homeowners from selling, new listings have lagged far behind what we’ve seen in prior years, pushing buyers to continue to bring their best offers even as home sales are 20% lower than at this time last year.”
Hale said she expects modest price cooling to continue, as affordability will slowly win out, according to a revised forecast for the rest of 2023 from Realtor.com.
“But as we’ve seen in the data, price trends will vary from market to market,” she added.
The largest year-over-year increases were in Miami, up 5.2%; Chicago, up 4.1%, and Atlanta, up 3.5%, according to the S&P report. The largest year-over-year declines were in Seattle, down 12.4%; San Francisco, down 11.1%; and Las Vegas, down 6.6%.
