The ongoing scarcity of homes available for sale continues to propel house prices upward, despite the highest mortgage rates seen in decades.
According to the S&P CoreLogic Case-Shiller 20-city price index, home prices increased by 0.2 percent in December, marking the 11th consecutive month of price gains. Compared to the previous year, home prices surged by 6.1 percent.
Many homeowners holding mortgages are currently benefiting from significantly lower interest rates compared to the rates offered by lenders today. Consequently, they are hesitant to sell their homes and incur higher mortgage costs for a new home purchase. While this trend has restrained home sales, it has contributed to the escalation of home prices and residential construction activity.
The Case-Shiller 20-city index, widely regarded as a key indicator of U.S. home prices, tracks repeat sales of homes to avoid distortions caused by shifts in the types of homes sold. It encompasses sales not only within city limits but also in the metropolitan areas surrounding the 20 largest cities in the country.
These indexes represent three-month averages, with the December figures reflecting data from November and October. Given that home sales typically close 45 to 60 days after the signing of a contract, the reported figures encompass transactions initiated as far back as August 2023.
In addition to the city-specific index, the national index, reflecting a broader measure of home prices, also increased by 0.2 percent, showing a 5.5 percent rise over the past year. Similarly, the 10-city index, focusing on the largest metropolitan areas, experienced a 0.2 percent monthly increase and a seven percent surge over the preceding 12 months.