The S&P CoreLogic Case-Shiller Index, a key measure of U.S. home prices, recorded a 4.2% annual gain in August, a slight decrease from previous levels in 2024.
The 10-City Composite saw an annual increase of 6%, down from a 6.8% annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 5.2%, dropping from a 5.9% increase in the previous month. New York again reported the highest annual gain among the 20 cities with an 8.1% increase in August, followed by Las Vegas and Chicago with annual increases of 7.3% and 7.2%, respectively. Denver posted the smallest year-over-year growth of 0.7%.
“Home price growth is beginning to show signs of strain, recording the slowest annual gain since mortgage rates peaked in 2023,” says Brian D. Luke, CFA, head of commodities, real & digital assets. “As students went back to school, home price shoppers appeared less willing to push the index higher than in the summer months. Prices continue to decelerate for the past six months, pushing appreciation rates below their long-run average of 4.8%. After smoothing for seasonality in the data, home prices continued to reach all-time highs, for the 15th month in a row.”
“Regionally, all markets continue to remain positive, barely,” Luke continued. “Denver posted the slowest annual gain of all markets this year, dropping below Portland for the first time since the spring. The Northeast remains the best performing region, with the strongest gains for over a year. Currently, only New York, Las Vegas and Chicago markets are at an all-time high. Comparing average gains of traditional red and blue states highlight a slight advantage for home price markets of blue states. With stronger gains in the Northeast and West than the South, blue states have outperformed red states dating back to July 2023.”
Realtor.com® Sr. Economic Research Analyst Hannah Jones had this to say:
“A persistent decline in mortgage rates could re-invigorate buyer demand and lead to accelerating price growth. However, existing home sales fell in September as recent mortgage rate progress did little to sway buyers into action. Mortgage rates climbed through October, pushing the possible pick-up in buyer demand further out. Zooming out, mortgage rates are expected to continue to trend lower in the coming months, but the path may be rather bumpy week-to-week, depending on incoming economic data. Buyers generally expect mortgage rates to improve over the next year, which could mean they choose to stay on the sidelines until further progress is realized.”
Bright MLS Chief Economist Lisa Sturtevant focused on the long term, but also predicted a further slowing of price appreciation—something that will likely be welcome news for buyers facing historic affordability barriers.
“Based on the HPI data, the typical home price in the U.S. has increased by more than 50% over the past five years. Coupled with rising mortgage rates, the typical monthly payment has risen even more. Housing costs have gone up much faster than incomes and, as a result, housing affordability is a growing challenge,” she said in a statement. “Home sales should pick up in the fourth quarter of 2024 as mortgage rates fall. The pace of home price appreciation will continue to fall as more inventory comes onto the market.”
Less optimistically, Sturtevant also warned there are some regions that could still see prices fall, after the “housing recession” of 2022-23 ended up milder than many predicted.
“Although widespread year-over-year price declines are not expected, there are some metro areas where prices will fall. Prices were up across the 20 largest metro areas in August, according to the Case-Shiller index, but the rate of price growth has slowed considerably in some markets and in nearly every metro,” Sturtevant said.
And this from CoreLogic Chief Economist Selma Hepp:
“Despite much-needed optimism, brought about by a sharp decline in mortgage rates in August, the boost was short-lived and not enough to markedly renew homebuyer interest. As a result, home prices continued to weaken relative to their seasonal trend. and year-over- year gains took a step back. Still, the slight boost in homebuyer demand seen during the weeks of falling mortgage rate illustrate the pent-up demand that is sitting on the sidelines and waiting for lower interest rates.”
