Home prices showed sustained growth in January

Home prices maintained their upward trajectory in the opening month of the year. The S&P CoreLogic Case-Shiller U.S. National Home Price Index posted a 6% annual gain in January, up from a 5.6% gain in December, according to a report released Tuesday. 

It was the seventh consecutive month of annual price growth and the biggest increase since November 2022. For the second consecutive month, all 20 cities tracked by the index reported annualized increases in prices. On a monthly basis, the national index, along with the 10- and 20-city composite indices, posted respective increases of 0.4%, 0.1% and 0.2% on a seasonally adjusted basis. 

“U.S. home prices continued their drive higher,” Brian D. Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, said in a statement. “Our National Composite rose by 6% in January, the fastest annual rate since 2022. Stronger gains came from our 10- and 20-City Composite indices, rising 7.4% and 6.6%, respectively. 

“For the second consecutive month, all cities reported increases in annual prices, with San Diego surging 11.2%. On a seasonal adjusted basis, home prices have continued to break through previous all-time highs set last year”

This month’s index tracks data from November, December and January. During  that three-month period, mortgage rates fell before picking up again to a range of 6.5% to 7%

San Diego posted an 11.2% year-over-year increase in home prices in January, the highest gain among the 20 cities tracked. Los Angeles (8.6%), Detroit (8.3%), Charlotte (8.1%) and Chicago (8%) rounded out the cities that saw home price growth of 8% or more. Portland, Oregon, held the lowest position in the ranking, posting an 0.9% yearly increase in January. 

“Housing affordability is a major concern for many prospective home buyers, with high home prices keeping some would-be buyers out of the market altogether,” Bright MLS chief economist Lisa Sturtevant said in a statement. “Despite recent reporting on realtor commissions, economic fundamentals explain why home prices continue to rise. There are simply too few homes available for sale to meet demand.

“Supply is loosening up in some markets, which will provide some relief to home buyers this spring and will ease upward pressure on home prices. However, we are unlikely to see any significant price drops in most markets because demand remains strong. A sharp economic downturn or spike in mortgage rates — neither of which are likely — are the only factors that could dramatically reduce the number of home buyers in the market.” 

For the week ending March 22, there were 513,000 single-family homes unsold on the market, up 1.1% from the previous week and up 24% from the same week a year ago, according to Altos Research data. 

“More inventory is a welcome development and suggests that some normalization in the U.S. housing market lies ahead,” Selma Hepp, chief economist at CoreLogic, said in a statement.