Home prices continued to trend upwards in December as the benchmark national index rose for a 24th consecutive month to a 19th straight record high. The seasonally adjusted home prices for the national index saw a 0.6% increase MoM, and a 4.1% increase YoY. After adjusting for inflation, the MoM fell to 0.3% and YoY fell to -0.5%.
The S&P Case-Shiller benchmark 20-City composite aims to measure the value of residential real estate in the following 20 major U.S. cities: Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington D.C. The benchmark 20-city index rose for a 23rd consecutive month to an 18th straight record high in January. The seasonally adjusted home prices for the 20-city index saw a 0.5% MoM, and a 4.7% increase YoY. After adjusting for inflation, the MoM was reduced to 0.1% and YoY was reduced to 0.1%.
The S&P Case-Shiller benchmark 10-City composite, a subset of the 20-city index, aims to measure the change in value of residential real estate in the following 10 major U.S. cities: Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington D.C. The benchmark 10-city index rose for a 23rd consecutive month to a 19th straight record high in January. The seasonally adjusted home prices for the 10-city index saw a 0.5% MoM, and a 5.4% increase YoY. After adjusting for inflation, the MoM dropped to 0.2% and YoY dropped to 0.7%.
Here is the analysis from today's Standard & Poor's press release:
ANALYSIS
“Home price growth continued to moderate in January, reflecting a clear two-part story across the past year,” says Nicholas Godec, CFA, CAIA, CIPM, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices.
“The National Composite Index posted a 4.1% annual gain, with the bulk of appreciation—4.8%—occurring in the first half of the year. Prices declined 0.7% in the second half, as high mortgage rates and affordability constraints weighed on buyer demand and market activity.
“Among the 20 metro areas tracked by the Composite 20, New York City led annual gains with a 7.7% rise, followed closely by Chicago (7.5%) and Boston (6.5%). Tampa was the only market to post a yearover-year decline, falling 1.5%. However, the second half of the year told a different story: San Francisco posted the largest six-month decline at 3.4%, followed by Tampa at 3.2%. Only four of the 20 cities managed to eke out price increases during this period—New York, Chicago, Phoenix, and Boston—highlighting broad-based cooling.
“Rising mortgage rates throughout the year elevated monthly payment burdens, which, combined with already high home prices, pushed affordability to multi-decade lows in many regions. This likely contributed to subdued activity in the back half of the year, with both buyers and sellers exercising caution. Inventory constraints also remain a challenge, particularly in legacy metro areas, where limited new construction continues to restrict supply.
“The strength in markets like New York and Chicago may reflect more normalized valuations relative to frothier regions, along with continued urban recovery trends post-pandemic. On the other hand, Sunbelt markets that experienced sharp run-ups earlier in the cycle—like Tampa and Phoenix—have seen the most pronounced slowdowns.
“Despite near-term softness, the S&P CoreLogic Case-Shiller Index remains historically elevated, and long-term homeowners have continued to build equity,” Godec concluded. “The current cycle reinforces the value of real estate as a long-duration asset, but also highlights how sensitive home prices are to changes in financing conditions and buyer affordability.”
