US home prices hit an all-time high in December, according to data released Tuesday.
Prices were up 0.2% from the month before, seasonally adjusted data from the S&P CoreLogic Case-Shiller US National Home Price Index showed. That continues a streak of seven consecutive record highs in 2023.
Compared to a year ago, the national composite index was also up, with prices 5.5% higher from December 2022. That was an increase from the 5% annual gain in November.
Prices in half of the 20 metro markets beat prior records, including Las Vegas, which was the fastest rising market in December, after accounting for seasonal impacts.
“US home prices faced significant headwinds in the fourth quarter of 2023,” said Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, in a release.
But, looking back on the year, a rising tide seemed to lift all boats, given broad-based performance in the US housing sector, Luke said. Home prices rose solidly after declining from roughly mid-2022 to the beginning of 2023 amid surging interest rates and high inflation. The annual growth in 2023 outpaced the average annual home price gain over the past 35 years.
All 20 markets reported yearly gains for the first time this year, Luke said, with four markets rising over 8%. Even Portland, Oregon, which had seen 11 months of declines, saw year-over-year growth.
Regionally, the Midwest and Northeast both experienced the greatest annual appreciation, with 6.7%.
Prices expected to continue to climb, but at a slower pace
Rising prices is good news for homeowners, who see what is typically the biggest component of their household wealth increasing in value, said Bill Adams, chief economist for Comerica Bank.
“The [home price] stabilization and then increase in 2023 helped Americans feel better about their household financial situation and boosted consumer confidence,” he said in a statement.
But, he added, housing supply and demand are in a very weird spot.
“Supply is constrained by homeowners who locked in low mortgage rates and tax assessments years ago, who might sell in a normal market but are sitting on the sidelines in this one,” Adams said. “Demand is constrained by high mortgage rates, as well as high prices contributing to an overall tough picture for homebuying affordability.”
He said that with supply and demand both tamped down, the balance between the two is actually more normal than during the frenzied surge in housing demand in 2020 and 2021.
That balance, together with a strong employment picture in the economy, suggests that prices aren’t going to be cooling much, if at all, this year.
“It is likely to translate into further house price increases in 2024, but at a slower rate than in 2023,” he said.
