Record High Home Prices in 2023

Strong Growth in Home Prices

Home prices saw a significant increase at the end of 2023, reaching an all-time high. This surge was driven by a tight market for existing homes, coupled with rising mortgage rates. According to the S&P CoreLogic Case Shiller Home Price Indices, prices rose by 6.1% compared to the previous year, surpassing expectations and showcasing robust growth in the real estate market.

National Level Performance

On a national level, home prices soared by 5.5% on a seasonally-adjusted basis, setting a new record in December. Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices, highlighted that the year 2023 exceeded average annual home price gains over the past 35 years. With trend growth at 4.7%, a 5.5% increase reflects steady and solid growth in the real estate sector.

Promising Outlook

Despite initial fluctuations due to high mortgage rates earlier in the year, home prices ended on a strong note in December. Economists anticipate a further increase in prices moving forward, as the low supply of homes for sale continues to drive up demand.

Upward Trend Continues

The latest data suggests that home prices in 20 major cities nationwide are expected to have risen by 5.9% in December compared to the previous year. Additionally, the seasonally-adjusted index is projected to show a 0.15% increase from the previous month, indicating a positive trend in the housing market.

Check back for more updates on this developing story.

Latest Trends in Home Prices

The National Association of Realtors recently reported a 5.1% increase in the median existing-home price from the previous year, marking the fastest growth since October 2022. However, despite this price surge, existing-home sales remained slow, with an annual rate of 4 million.

Supply and Demand Dynamics

Scarce inventory levels have been a key factor driving the high price growth and low sales volume in the housing market. According to the NAR, it would take approximately three months to sell every home listed at the end of January. Lawrence Yun, the NAR's chief economist, emphasized that the course of home prices this spring will heavily depend on supply levels.

Impact of Supply on Prices

Looking at new home sales, the Census data revealed a 1.5% increase in sales in January, resulting in a seasonally adjusted annual rate of 661,000. Despite this uptick in sales, there is still an abundant supply of new homes, with over eight months needed to sell every new home listed at that pace. The median price for new homes in January was $420,700, representing a 2.6% decrease from the previous year.

Market Insights from Redfin

Tracking the housing market trends, Redfin reported that the median sale price in major metros reached $365,000 in the four weeks leading up to February 18th, showing a 6% increase compared to the previous year. Additionally, homes entering the market were priced just under $400,000.

Overall, while home prices have shown resilience and steady growth, the market continues to face challenges related to inventory levels and sales volume.