In November, the S&P CoreLogic Case-Shiller national home price index revealed a 0.2% decline in home prices compared to October. While seemingly modest, this drop marks the first monthly decrease since January 2023. The noteworthy shift is attributed to a substantial increase in mortgage rates during October, reaching their highest point in over two decades, thereby making homeownership less affordable.
Seattle and San Francisco experienced the most significant monthly declines, with prices falling by 1.4% and 1.3%, respectively. In contrast, six cities reached new all-time highs in November, including Miami, Tampa, Atlanta, Charlotte, New York, and Cleveland.
Despite the monthly decline, national home prices remained higher than the previous year, with annual gains surpassing the prior month’s figures. Prices rose by 5.1% from November 2022, compared to a 4.7% annual increase in October. The 10-city composite increased by 6.2%, up from the 5.7% reported in October, while the 20-city composite rose by 5.4%, an increase from the previous month’s 4.9%.
Brian Luke, Head of Commodities, Real & Digital Assets at S&P DJI, pointed out that the decline in house prices coincided with a peak in mortgage rates, with the average Freddie Mac 30-year fixed-rate mortgage nearing 8%, according to Federal Reserve data. Since then, rates have dropped by over 1%, potentially providing support for further annual gains in home prices.
For the second consecutive month, Detroit reported the highest year-over-year gain among the 20 cities, with prices rising by 8.2% in November. San Diego followed closely with an 8% increase. Notably, Portland, Oregon, was the only city where prices were lower than the previous year, showing a 0.7% decrease compared to November 2022.
Regionally, the November report indicated the narrowest price performance spread across the country since the first part of 2021. Brian Luke added that this trend signifies a rising tide across the country, with less evidence of micro-markets deviating from the overall pattern. The days of Southern markets experiencing double-digit growth while Midwest markets remained stagnant seem to be a thing of the past.
