US home prices continued to rise in September, hitting a new record high and marking the eighth consecutive month of increases, according to data released Tuesday.
Even as mortgage rates lingered above 7% in September, historically low inventory continued to push up the price of a home.
Prices rose 0.7% in September from the month before, according to seasonally adjusted data from the S&P CoreLogic Case-Shiller US National Home Price Index.
Compared to a year ago, the national composite index also rose, with prices up 3.9% from September 2022, the data shows.
Year to date in September, the national composite, which covers all nine US census divisions, has risen 6.1%. That is well above the typical annual increase over the 35 years that S&P has tracked the 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 Dow Jones Indices.
Unless broader events lead to general economic weakness, the breadth and strength of prices are expected to continue, he said.
Where are home prices at record highs?
On a seasonally adjusted basis, all 20 cities in a separate index showed price increases in September, and prices in 17 of them are higher than they were in September 2022.
Notably, home prices were at all-time highs in September in these cities: Atlanta, Boston; Charlotte, North Carolina; Chicago; Cleveland; Detroit; Miami; New York and Tampa, Florida.
Year over year, the cities where home prices grew the most in September were Detroit, where prices were up 6.7%; San Diego, up 6.5%; and New York, up 6.3%.
Cities where prices dropped the most from September 2022 were Las Vegas, down 1.9%; Phoenix, down 1.2%; and Portland, Oregon, down 0.7%.
The Northeast and Midwest each had price increases of more than 5% from September 2022 and continue to be the nation’s strongest regions. The West, where prices have fallen from a year ago, remains the weakest.
Low inventory pushing prices higher
The latest Case-Shiller index shows the impact of strong housing demand and limited supply, as home prices continued on their upward trajectory into the early fall, said Hannah Jones, senior economic research analyst at Realtor.com.
“September’s index data tracks July, August and September, a period through which mortgage rates climbed steadily from 6.8% in the beginning of July to 7.3% by the end of September,” she said.
Higher prices and higher mortgage rates led to crushing affordability challenges for homebuyers in September, bringing existing home sales to 13-year lows. And limited inventory kept prices relatively high.
As a result, Jones said, some buyers sought out alternatives in the new construction market. New home sales ticked up in September, climbing 33.9% year over year.
“As new home sales surged, new home inventory also grew to a larger share of available inventory,” added Jones. “Almost 1 in every 3 homes available on the market in September was newly constructed, almost twice the pre-pandemic share.”
