S&P Case-Shiller Home Price Index: Upward Trend Decelerates in December

Home prices continued to trend upwards in December, albeit at a slower pace, as the benchmark 20-city index rose for an eleventh consecutive month. The S&P Case-Shiller Home Price Index revealed seasonally adjusted home prices for the 20-city index saw a 0.2% increase month-over-month (MoM) and a 6.2% increase year-over-year (YoY). After adjusting for inflation, the MoM was reduced to -0.2% and the YoY was reduced to -0.2%.

SP Case-Shiller Home Price Index 20-city composite

The seasonally adjusted home prices for the 10-city index saw a 0.2% MoM, and a 7.0% increase YoY. After adjusting for inflation, the MoM dropped to -0.2% and YoY dropped to 0.6%.

SP Case-Shiller Home Price Index 10-city composite

The seasonally adjusted home prices for the national index saw a 0.2% increase MoM, and a 5.6% increase YoY. After adjusting for inflation, the MoM fell to -0.2% and YoY fell to -0.7%.

SP Case-Shiller Home Price Index national composite

Here is the analysis from today's Standard & Poor's press release:

ANALYSIS

“U.S. home prices faced significant headwinds in the fourth quarter of 2023,” says Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices. “However, on a seasonally adjusted basis, the S&P Case-Shiller Home Price Indices continued its streak of seven consecutive record highs in 2023. Ten of 20 markets beat prior records, with San Diego registering an 8.9% gain and Las Vegas the fastest rising market in December, after accounting for seasonal impacts.”

“2023 U.S. housing gains haven’t followed such a synchronous pattern since the COVID housing boom. The term ‘a rising tide lifts all boats’ seems appropriate given broad-based performance in the U.S. housing sector. All 20 markets reported yearly gains for the first time this year, with four markets rising over 8%. Portland eked out a positive annual gain after 11 months of declines. Regionally, the Midwest and Northeast both experienced the greatest annual appreciation with 6.7%.”

“Looking back at the year, 2023 appears to have exceeded average annual home price gains over the past 35 years. With trend growth at the national level of 4.7%, a 5.5% return demonstrates solid, steady growth. While we are not experiencing the double-digit gains seen in the previous two years, above-trend growth should be well received considering the rising costs of financing home mortgages. We previously suggested that the surge in home prices during the COVID pandemic could have accelerated home ownership temporarily. The past two years reflect consistent growth slightly above trend, suggesting a more secular shift in home ownership post pandemic. In the short term, meanwhile, we should be able to measure the impact of higher mortgage rates on home prices. Increased financing costs appeared to precipitate home price declines in the fourth quarter, as 15 markets saw lower values compared to September.”