The principal barometer of U.S. home prices shows a significant uptick in the housing market, with home prices in major U.S. cities soaring at the fastest annual rate since November 2022.
The latest S&P CoreLogic Case-Shiller Index covers all nine U.S. census divisions. The gauge reported a 4.8% annual increase in October 2023, up from a 4% change in the previous month.
This upswing aligns with market expectations, primarily fueled by a persistent shortage of homes for sale, which has been a major factor driving up home prices.
The 10-City Composite showed a 5.7% increase, up from 4.8% in the previous month, while the 20-City Composite posted a year-over-year uptick of 4.9%, up from 3.9%.
| Index Component | Annual Increase (Oct. 2023) | Month-over-Month Change (Oct./Sep. 2023) |
|---|---|---|
| U.S. National Index | 4.8% | 0.2% |
| 10-City Composite | 5.7% | 0.2% |
| 20-City Composite | 4.9% | 0.1% |
Detroit Leads, Portland Lags Behind
Detroit was the fastest-growing market for the second month in a row, registering an 8.1% annual gain. San Diego and New York followed, with 7.2% and 7.1% gains, respectively.
The Midwest and Northeast regions were the fastest-growing markets, while the Southwest and West regions lagged behind other regions for over a year.
According to Brian D. Luke, head of commodities, real and digital assets at S&P DJI, “home prices leaned into the highest mortgage rates recorded in this market cycle and continued to push higher. With mortgage rates easing and the Federal Reserve guiding toward a slightly more accommodative stance, homeowners may be poised to see more appreciation."
Portland experienced a 0.6% decline in home prices compared to the previous year. This made it the only city among the 20 cities covered in the S&P CoreLogic Case-Shiller Index to report lower prices in October compared to the year before.
| Metropolitan Area | Change (Oct. 2023 vs. Sep. 2023) | Change (Oct. 2023 vs. Oct. 2022) |
|---|---|---|
| Detroit | 0.3% | 8.1% |
| San Diego | -0.1% | 7.2% |
| New York | 0.5% | 7.1% |
| Miami | 0.6% | 6.7% |
| Chicago | 0.2% | 6.9% |
| Boston | 0.3% | 6.6% |
| Cleveland | 0.2% | 6.4% |
| Los Angeles | 0.4% | 6.1% |
| Charlotte | 0.3% | 6.0% |
| Atlanta | 0.2% | 5.3% |
| Washington | -0.3% | 4.7% |
| Minneapolis | -0.3% | 2.8% |
| Tampa | 0.0% | 2.3% |
| Denver | -0.6% | 1.6% |
| San Francisco | -0.6% | 1.6% |
| Seattle | -0.5% | 1.5% |
| Dallas | -0.3% | 1.2% |
| Phoenix | 0.6% | 0.9% |
| Las Vegas | 0.3% | 0.1% |
| Portland | -0.9% | -0.6% |
Market Reactions
The real estate sector, as gauged by the Real Estate Select Sector SPDR Fund XLRE, exhibited a steady start on Monday, in a generally subdued trading session following the Christmas holidays.
Particular standouts on Monday included Office Properties Income Trust OPI, Compass, Inc. COMP, and Net Lease Office Properties NLOP, up 3.7%, 3.3% and 2.4% respectively.
Since the beginning of the year, the XLRE ETF has risen by 7%, signaling a robust rebound from the 29% slump it experienced in 2022.
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