U.S. Home Prices Reach New Record High
November 1, 2023
Home prices in the U.S. rose to a record high in August as an ultra-tight supply of homes for sale kept the market competitive.
Home prices nationwide, as tracked by the S&P CoreLogic Case-Shiller National Home Price Index, rose 2.6% from a year earlier in August, compared with a 1.0% annual increase the month prior. That is the highest level since the index was started in 1987. On a month-to-month basis, the index rose by a seasonally adjusted 0.9% in August.
Though prices have risen, the number of homes sold has ground to a veritable halt amid mortgage rates that have climbed to their highest levels in 20 years. Higher rates have the combined effect of keeping prospective buyers on the sidelines as more expensive lending prices them out. At the same time, existing owners are reticent to sell, trading in their current low mortgage rates for higher ones. This low inventory of homes for sale has kept prices aloft, even as demand is subdued.
The Case-Shiller index reports on a two-month delay and reflects a three-month moving average. Homes typically go under contract a month or two before they close, so the August data is based on purchase decisions made earlier in the summer, when rates were elevated, but not as high as they have risen in recent months.
The median price for an existing home, which makes up the bulk of the market, rose 2.8% in September from a year earlier to $394,300, according to the National Association of Realtors. The one-two punch of high home prices and rising mortgage rates has made home purchasing unaffordable to many would-be buyers. A prospective buyer would have needed an income of nearly $115,000 to afford the median-priced U.S. home in August, assuming a 20% down payment, according to real-estate brokerage Redfin. That is up from about $99,000 a year earlier.