Home prices hit a new all-time high in December
US home prices rise again in December as inventory shortage persists
US is facing a 'perfect storm' of housing unaffordability
Real estate agent Mauricio Umansky says high mortgage rates, high prices and low supply are creating difficulties for homebuyers on 'The Claman Countdown.'
Home prices rose for the 11th consecutive month in December, as housing inventory remained painfully low.
Prices increased 5.5% nationally in December when compared with the previous year, the S&P CoreLogic Case-Shiller index showed on Tuesday. That is up from the 5% annual increase recorded the prior month. On a monthly basis, prices fell 0.4%, according to the index.
The 10-city composite, which encompassed Los Angeles, Miami and New York, rose 7% annually, compared with an increase of 6.3% in November. The 20-city composite, which also tracked housing prices in Dallas and Seattle, posted an annual gain of 6.1%, which also marks an increase from the 5.4% figure recorded the previous month.
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Homes in Rocklin, California, on Dec. 6, 2022. (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)
There was a major discrepancy in the price gains in the 20 cities: San Diego reported an 8.8% annual gain in December, followed by Los Angeles and Detroit, each with an 8.3% increase. Portland, Oregon, saw the smallest gain in December, with home prices climbing just 0.3% from the prior year.
However, it marked the first time in 2023 that all 20 cities reported a year-over-year gain.
"While we are not experiencing the double-digit gains seen in the previous two years, above-trend growth should be well received considering the rising costs of financing home mortgages," said Brian Luke, head of commodities, real and digital assets at S&P DJI, in a release.
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The Case-Shiller index reports with a two-month delay, meaning it may not capture the latest ongoings in the market.
A house is for sale in Arlington, Virginia, on July 13, 2023. (Photo by SAUL LOEB/AFP via Getty Images / Getty Images)
The interest-rate-sensitive housing market entered a deep freeze last year in the wake of the Federal Reserve's aggressive interest-rate hike campaign. However, prices have quickly recovered as buyers adjust to higher mortgage rates and compete for a limited supply of homes.
The problem is unlikely to be resolved anytime soon. With mortgage rates hovering near the highest level in two decades, sellers who locked in a low rate before the pandemic began have been reluctant to sell, leaving few options for eager would-be buyers.
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Available home supply is still down a stunning 34.3% from the typical amount before the COVID-19 pandemic began in early 2020, despite a recent drop in mortgage rates, according to a separate report published by Realtor.com.