US Home-Price Growth Accelerates in December
“Home-Price Growth in the US Accelerates in December, Fueled by Drop in Mortgage Rates”
In a surprising turn of events, home-price growth in the US accelerated in December, marking a significant increase from the previous month. According to data from S&P CoreLogic Case-Shiller, prices nationally rose by 5.5% from a year earlier, surpassing the 5% annual gain seen in November.
Among the 20 cities tracked, San Diego led the way with the biggest year-over-year gain of 8.8%, followed closely by Los Angeles-Orange County and Detroit, each with an 8.3% increase. This surge in home prices comes on the heels of a steep drop in mortgage rates, which reached a two-decade high of 7.79% before falling to 6.61% by the end of the year.
Experts attribute this spike in prices to a combination of factors, including a tight supply of homes listed for sale and pent-up demand from buyers. Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, noted that 2023 exceeded average annual home-price gains over the past 35 years, signaling a robust performance in the housing sector.
While rising prices may be good news for homeowners, there are concerns about the impact on affordability. Bill Adams, chief economist for Comerica Bank, pointed out that high mortgage rates and soaring prices are making it difficult for potential buyers to enter the market. Despite this, the balance between supply and demand is more normalized compared to previous years, suggesting that prices are unlikely to cool off anytime soon.
Looking ahead to 2024, experts predict further increases in house prices, albeit at a slower rate than in 2023. With a strong employment picture in the economy, the housing market is expected to remain robust, providing homeowners with a valuable asset that continues to appreciate in value.
Overall, the housing market in the US is experiencing a period of growth and stability, driven by a combination of factors that are shaping the real estate landscape for the year ahead.