Rosalind Evans
The housing market witnessed a remarkable upturn in October 2023, defying expectations amidst soaring mortgage rates. According to the latest S&P CoreLogic Case-Shiller home price index, national home prices experienced a significant 4.8% rise compared to the same month last year, marking the most significant annual gain of the year. This growth outstripped September’s 4% yearly increase, signalling a robust trend in the real estate sector.
In a more detailed breakdown, the 10-city composite soared by 5.7%, an uptick from the 4.8% increase seen in the preceding month. Similarly, the 20-city composite witnessed a rise of 4.9%, advancing from a 3.9% increase in September. This surge in home prices occurred in the face of increasing mortgage interest rates, which notably peaked over two decades. On October 19, the average rate on the 30-year fixed loan exceeded 8%, as reported by Mortgage News Daily. However, a subsequent decline in rates through November and December saw the 30-year fixed rate stabilize around 6.7%.
Brian Luke, head of commodities, real & digital assets at S&P DJI, commented: “Home prices leaned into the highest mortgage rates recorded in this market cycle and continued to push higher.” He added, “With mortgage rates easing and the Federal Reserve guiding toward a slightly more accommodative stance, homeowners may be poised to see more appreciation.”
In an impressive display of regional growth, Detroit led the top 20 cities with an 8.1% year-over-year gain in home prices for October. San Diego closely followed this at 7.2% and New York at 7.1%. However, Portland, Oregon, deviated from this pattern, recording a 0.6% decline in home prices, the only city in the index to show a decrease compared to the previous year.
Selma Hepp, chief economist at CoreLogic, provided further insights, “Home price gains in the CoreLogic S&P Case-Shiller Index have increased by 7% since the beginning of the year and are 1% higher than at the peak in 2022, recovering all losses recorded in the second half of 2022.” Hepp anticipates, “Given the stronger seasonal gains seen in early 2023, annual home price appreciation should accelerate this winter before slowing again next year.”
The housing market’s resilience and strength, especially in October 2023, have been a beacon of optimism in an otherwise volatile economic environment. The interplay of rising mortgage rates, regional variances, and subsequent rate declines presents a dynamic and evolving landscape. As the market adjusts and responds to these fluctuations, homeowners and investors alike watch with keen interest, anticipating the trajectory of the real estate sector in the coming months.
