The current state of housing affordability in the U.S. has been described in recent reports as bleak and unbalanced, citing low inventory mixed with high home prices and mortgage rates. The latest S&P CoreLogic Case-Shiller Home Price Index showed prices still increasing, but the rate of that increase has continued to slow down month-over-month.
In October 2024 (the Case-Shiller Index runs with a two-month lag), home prices saw an annual increase of 3.6%. This comes off the previous index finding a 3.9% increase in September, which, at the time, was described as the lowest annual price gain since August 2023 (when the annual gain was 2.6%). That description has now been taken by October’s 3.6% gain, which is the latest in a seven-month streak of home price gains slowing month-over-month.
A slower rate of growth should not be taken to mean that home prices are coming down, though. The Case-Shiller National Index (a composite of single-family home price indices and Federal Housing Finance Authority data) reached a new record high for the 17th consecutive time in October 2024—the current index level, 324.22, is 75.6% higher than the previous index peak in 2006.
In a release responding to the Case-Shiller Index, Bright MLS Chief Economist Dr. Lisa Sturtevant noted that “prices have risen every month in 2024, even as mortgage rates have remained stubbornly high and as housing affordability has reached an all-time low.”
Sturtevant cites declining appreciation, both nationally and within Case-Shiller’s surveyed large metro areas, as signs that “these pressures might be starting to have an effect on home price appreciation.”
Realtor.com® Senior Economist Joel Berner said in a release that “home-price appreciation seems to be settling into a more comfortable pace, just as inventory levels pick up going into 2025: welcome news for prospective buyers who continue to face the headwinds of high mortgage rates.”
“We are unlikely to see widespread home-price declines in 2025, but there are some metros where fast-rising inventory and cooling demand will lead to falling prices in the year ahead,” said Sturtevant, in turn pointing to Bright MLS’ own 2025 housing forecasts, which suggest “that markets in Florida are at most risk of price declines in 2025. Other markets that surged during the pandemic, including metros in Utah and Colorado, are also poised for much cooler conditions in 2025.”
Berner added that, according to the latest data, different types of homebuyers have different levels of opportunity.
“For savvy and equity-rich buyers, this provides an opportunity to take advantage of relatively weak prices and an ever-growing set of options,” he said. “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.”
In the Case-Shiller report, Brian D. Luke, S&P’s head of commodities, real & digital assets, said that the end of the U.S. election could be an important factor when November’s numbers come in:
“With the latest data covering the period prior to the election, our national index has shown continued improvement. Removing the political uncertainty risk has led to an equity market rally; it will be telling should the similar sentiment occur among homeowners.”
Regional breakdown
Across the 20 large metropolitan areas surveyed by the Case-Shiller Index, only two markets saw (seasonally adjusted) price indices decline from September to October: Tampa, Florida (which declined by -0.12%) and Cleveland, Ohio (-0.29%).
Seasonally adjusted, the markets that saw the highest increases from September to October were:
- Boston and Washington, D.C. (both +0.70%)
- Denver and Phoenix (both +0.50%)
- Portland, Oregon (+0.42%)
The markets with the highest annual price index changes included:
- New York (+7.27%)
- Chicago (+6.24%)
- Las Vegas (+5.90%)
- Cleveland (+5.84%)
- Washington, D.C. (+5.67%)
The markets with the lowest annual price index changes included:
- Tampa (+0.39%)
- Denver (+0.44%)
- Dallas (+0.85%)
- Phoenix (+1.20%)
- Portland (+1.39%)
In his commentary, Berner noted these results are suggestive of regional trends: high housing inventory in the South and West, resulting in lower price appreciation in metro areas located there.
“Meanwhile, in the Northeast and Midwest, markets like New York (+7.27%) and Chicago (+6.24%) are driving the national-level price growth,” said Berner. “Homebuilders have taken notice of this trend, and are throttling back construction in the South while pushing it forward in the Northeast.”
For the full Case-Shiller report, click here.
