Home prices edged toward a more affordable place in November, ending the upward trend after many months, according to the latest S&P CoreLogic Case-Shiller Indices report.
The report is a measure of U.S. home prices across major metro areas. Across the country,12 out of 20 markets saw a month-over-month decrease in home prices. The 10-city composite decreased by 0.1% month-by-month, while the 20-city composite decreased by 0.2%.
“U.S. home prices edged downward from their all-time high in November,” Brian D. Luke, the head of commodities, real and digital assets at S&P DJI, said. “The streak of nine monthly gains ended in November, setting the index back to levels last seen over the summer months.”
While this decline may signal a more affordable market for homebuyers in the future, year-over-year prices haven’t lowered. The 10-city composite rose by 6.2% annually and the 20-city composite increased by 5.4%.
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These cities saw the highest rising home prices
Of the major metro areas covered by the S&P report, Detroit, MI saw the highest year-over-year gain in home prices. In November, prices increased in Detroit by 8.2%.
San Diego, CA saw the next largest price hike, with an 8% average increase. On the other end of the spectrum, Portland prices fell by 0.7%. It’s the only city that reported lowering prices in November 2023 versus November 2022.
“The Northeast and Midwest recorded the largest gains with returns of 6.4% and 6.3%, respectively,” the Case-Shiller indices reported. “Other regions are not far behind with the slowest gains in the West of 3%. This month’s report revealed the narrowest spread of performance across the nation since the first quarter of 2021.”
Cities with increasing prices typically have stronger local economies that can support more workers, and are still relatively affordable compared to other major metro areas, Realtor.com reported.
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Housing demand increases despite high home prices
Some cities saw slight declines in home prices in November, but prices are generally likely to continue rising as the market picks up.
In 2023, about 668,000 new homes were sold, Census Bureau data showed. That’s an increase of 4.2% from the 641,000 homes sold in 2022.
“Home price growth continued to accelerate through the winter and registered solid monthly gains despite mortgage rate surge before the Fed December meeting which weighed heavily on already existing affordability challenges,” said Dr. Selma Hepp, chief economist at CoreLogic.
“With mortgage rates now lower and spring home buying demand already lurking, home prices will continue to rise, especially considering the outsized pent-up demand for homes coming from young buyers, those who have been waiting for lower rates, and huge influx of immigrants over the last couple of years.”
Demand for homes declined the last few months as interest rates rose, but in November, home sales rose by 0.8%, according to Realtor.com data. With mortgage interest rates heading toward the lower 6% range, demand for homes is likely to increase in 2024.
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