Home prices remain elevated, continuing to create affordability challenges across the market for buyers and sellers alike. However, the rate at which prices increase continues to slow down, according to the latest data.
Home prices saw an annual increase of 3.92%, up from the 3.70% annual gain seen last month, according to the S&P CoreLogic Case-Shiller Index for December 2024. While prices saw an annual gain, month-over-month they were down 0.15%.
“It has been five years since the Covid-19 outbreak took hold of the global economy, sparking unprecedented volatility, massive fiscal and monetary stimulus, and a housing market that responded to national migratory changes in how we work and where we live,” says Brian D. Luke, CFA, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices.
Luke noted that while the National Index continues to trend above inflation, “we are a few years removed from peak home price appreciation of 18.9% observed in 2021 and are seeing below-trend growth over the history of the index.”
Realtor®.com Senior Economic Research Analyst Hannah Jones noted that “listing prices have eased in recent months as sellers look to attract buyers and more small, affordable homes come up for sale.”
“However, despite trends towards lower listing prices, higher priced homes continue to sell, driving sales prices higher,” she continued. “The divide in the housing market persists as buyers in the low-to-mid price range largely keep to the sidelines while buyer activity in the high-to-luxury price range carries on, skewing sale prices higher. Lower mortgage rates are not likely going to be achieved in the short term, meaning affordability challenges are likely to persist in the coming months.”
In terms of the 20-city composite index, home prices saw a 4.48% increase year-over-year, up from the 4.30% increase last month.
Among the cities tracked, the cities with the highest annual increases were: New York (7.22%), Chicago (6.60%), Boston (6.35%) and Seattle (5.61%). The only city to see a year-over-year decrease was Tampa (down 1.11%).
Month-over-month, all 20 cities saw decreases. The cities that saw the largest decreases from November to December were: Tampa (down 1.02%), Cleveland (down 0.90%), Atlanta (down 0.56%) and Minneapolis (down 0.54%).
Bright MLS Chief Economist Lisa Sturtevant said that “localized events” like the Los Angeles wildfires and layoffs in Washington D.C. will impact housing prices overall, with growth expected to remain muted in the near term.
“An increase in the number of available homes for sales and weaker demand likely will lead to much slower home price appreciation—or even year-over-year price drops—this spring,” Sturtevant said.
“The S&P CoreLogic Case-Shiller Index continues to highlight the upward trend of home prices nationally,” Luke concluded. “Through this recent market cycle, the ability of Americans to grow wealth by participating in the upside of the U.S. housing market, particularly if done through a leveraged position by securing a mortgage, has proven to be historically beneficial.”
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