📈 S&P Case-Shiller: Home Prices Hit New Highs

This morning’s release of the S&P/Case-Shiller Home Price Index shows a continued, upward climb in home prices. The index tracks property values in 20 US metropolitan regions with a two-month lag. Many closely watch the index due to its robust methodology that weighs transactions from repeat sales of the same home across time rather than an average of many properties in a given area.

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Home values fell late last year (from June 2022 through January 2023), declining by 5.0% in those seven months. However, price increases since January have erased earlier declines, as shown with August’s figures representing a new all-time high. Prices remain stable, with the most recent August figures showing substantial growth within many cities that that index tracks.

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Although home prices have climbed to a recent high, recent year-over-year changes, show a slight slowdown in home price growth coming out of record-breaking growth levels during the pandemic. Rising mortgage rates and elevated home prices have weakened home buyer demand.

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Despite the headwinds, growth remains near historical median levels in the long view. Data from today’s report puts the Home Price Index median annual home value growth at 4.6% year-over-year for the past 15 years and 5.0% year-over-year for the past 30 years.

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While the Case-Shiller Home Price Index year-over-year growth is stabilizing at 2.6% in the face of current market conditions, single-family rent growth in August remains similarly strong at 2.9%, as rental rates have been shown to be resilient in periods with slight declines in home price growth.

Although there has been a deceleration in home price growth since the pandemic, a longer-term perspective shows home price growth is still close to historical median levels. Meanwhile, despite declining price growth, single-family rental rates have proven resilient. These trends, combined with limited supply, suggest a challenging environment for home buyers, with many choosing to rent in hopes that home prices will eventually cool despite ongoing growth.

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