January saw the highest rate of appreciation expected for 2024, as year-over-year single-family home price gains reached 5.8%, according to the CoreLogic Home Price Index (HPI) and HPI Forecast™ for January 2024.
While year-over-year price gains reached their height in January, growth is expected to slow to 2.6% by early 2025.
“U.S. annual home price growth strengthened to 5.8% in January 2024,” said CoreLogic Chief Economist Dr. Selma Hepp. “And while the acceleration continues to reflect the residual impact of strong appreciation in early 2023, the annual rate of growth is expected to taper off in coming months.”
Additionally, both higher mortgage rates and inventory shortages are negatively impacting affordability in the U.S., which tends to have a lasting effect on areas where wages are usually lower.
Despite affordability proving to be a challenge to younger residents across the nation, homeownership is still being attained, and millennials accounted for more than half of home purchase applications from 2020 to 2023. On the other hand, financially stable baby boomers can pay for homes fully in cash, which causes another new challenge for buyers.
“Home prices further increased in late 2023 despite high mortgage rates, which surged to the highest level since the beginning of the millennium,” Hepp said. “But metro areas that have struggled with the impact of higher rates continue to see downward movement on home prices. Generally, pressures from higher mortgage rates tend to occur in markets where the higher cost of homeownership pushes against the affordability ceiling.”
Key takeaways:
- U.S. single-family home prices increased by 5.8% year-over-year in January 2024.
- Home prices increased by 0.1% compared with December 2023 month-over-month.
- The annual appreciation of detached properties (6%) was 1.1 percentage points higher than that of attached properties (4.9%) in January.
- Rhode Island, New Jersey and Connecticut topped the list for annual home price gains for the fourth consecutive month.
For the full report, click here.
