US Home Prices Soar to Record Heights in December, Predicted to Continue Climbing in 2024

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According to data released on Tuesday, US home prices reached a historic peak in December, marking a 0.2% increase from the previous month, as per the seasonally adjusted data from the S&P CoreLogic Case-Shiller US National Home Price Index. This upswing maintains a streak of seven consecutive record highs throughout 2023.

Comparing to December 2022, the national composite index also witnessed a 5.5% rise, surpassing the 5% annual gain recorded in November.

Half of the 20 metro markets saw prices surpass prior records, with Las Vegas emerging as the fastest-growing market in December, factoring in seasonal impacts.

Brian Luke, head of commodities, real, and digital assets at S&P Dow Jones Indices, noted that US home prices encountered significant challenges in the fourth quarter of 2023. However, reflecting on the year, he observed a general upsurge across the US housing sector, despite earlier declines in mid-2022 to early 2023 amid escalating interest rates and inflation. The annual growth in 2023 surpassed the average annual home price gain of the past 35 years.

Luke further stated that all 20 markets reported yearly gains for the first time this year, with four markets witnessing increases exceeding 8%. Even Portland, Oregon, which experienced 11 months of decline, saw year-over-year growth.

Regionally, both the Midwest and Northeast experienced the highest annual appreciation, at 6.7%.

Bill Adams, chief economist for Comerica Bank, highlighted that rising prices are beneficial for homeowners, boosting their household wealth. However, he pointed out the peculiar dynamics in the housing market, where supply is constrained by homeowners who locked in low mortgage rates and tax assessments, while demand is hindered by high mortgage rates and soaring prices, making homebuying affordability challenging.

Looking ahead, prices are anticipated to continue their ascent, albeit at a slower pace.

Adams continued by emphasizing that the current equilibrium between supply and demand, although subdued, represents a more normalized state compared to the frenetic surge in housing demand witnessed in 2020 and 2021.

He pointed out that this balance, coupled with a robust employment landscape in the economy, indicates that there won’t be significant cooling in prices, if any, throughout the year.

“It is probable that this will result in further increases in house prices in 2024, albeit at a slower pace than the previous year,” he concluded.

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