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Home price growth continues to slow in the U.S., as high mortgage rates and persistent affordability challenges weigh on the housing market.
Nationwide, home prices grew 3.6% in October from one year ago, down from 3.9% in September and the seventh straight month of declining annual gains, according to the latest S&P CoreLogic Case-Shiller Index data released on Tuesday.
The index’s composite of the 20 largest cities posted a year-over-year increase of 4.2%, down from a 4.6% increase in the previous month. New York again reported the highest annual gain among the 20 cities with a 7.3% increase in October, while Tampa recorded the smallest gain at 0.4%.
Although price growth is slowing, the national index hit another all-time high in October, reflecting home prices that remain at their highest ever, after accounting for seasonal fluctuations.
“With the latest data covering the period prior to the election, our national index has shown continued improvement,” says Brian D. Luke, head of commodities, real & digital assets for S&P Dow Jones Indices. “Removing the political uncertainly risk has led to an equity market rally; it will be telling should the similar sentiment occur among homeowners.”
Home prices have continued to gain nationally despite challenges that have sent home sales to near 30-year lows. As 2024 draws to a close, the country is on pace for its slowest year of existing home sales since 1995.
Mortgage rates have remained a major speedbump for demand, after rates remained near 7% for much of the year. Overall affordability is also a persistent concern, with the typical home payment now eating up a bigger chunk of the median paycheck than at any point in the past 40 years.
“Purchasing a home is especially difficult right now because of high mortgage rates. These high rates gum up the gears of the housing market, leading to fewer sales and more modest price appreciation like the Case-Shiller Index showed today,” says Realtor.com Senior Economist Joel Berner.
“For savvy and equity-rich buyers, though, this provides an opportunity to take advantage of relatively weak prices and an ever-growing set of options. Buyers without the ability to self-finance, especially first-time buyers who don’t already have equity in a home they could sell, will continue to struggle to find opportunities even as prices moderate,” he adds.
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