Home price growth flatten as sales remain sluggish

Analysts predict stable prices and limited sales activity

Home price growth flatten as sales remain sluggish

US home prices continue to rise, but at a slowing pace, suggesting a less volatile spring market. 

The S&P CoreLogic Case-Shiller National Home Price Index (HPI) reported a 6% annual gain in January, four basis points higher than the previous month’s increase.

Additionally, the 10-City Composite recorded a 7.4% increase, up from 7% in the prior month, while the 20-City Composite showed a year-over-year rise of 6.6%, compared to 6.2% in the previous month.

Month-over-month data also remained level, with the national index (0.4%), 20-City Composite (0.1%), and 10-City Composite (0.2%) all posting gains after seasonal adjustment.

Brian Luke, head of commodities at S&P Dow Jones Indices, noted the consistent performance across most markets in 2023. However, he highlighted the widening gap between high- and low-tier cities, with homeowners across the board experiencing gains in the past year.

“We’ve commented on how consistently each market performed during 2023, and that continues to be the case,” he said in the report. While there is a large disparity between leaders such as San Diego and laggards such as Portland, the broad market performance is tightly bunched up. This is also true of high and low tiers. The average annual gains between high and low tiers across cities tracked by the indices are just 1.1%. Low-price tiered indices have outperformed high-priced indices for 17 months.

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“Homeowners most likely saw healthy gains in the last year, no matter what city you were in or if it was in an expensive or inexpensive neighborhood,” Luke said. “No matter which way you slice it, the index performance closely resembled the broad market.”

Max Slyusarchuk, CEO of A&D Mortgage, believes this trend indicates that “home price growth will likely not surge going into the spring home buying season, as home sales are fairly stagnant at this moment.”

Slyusarchuk predicts that a potential drop in interest rates towards the second half of 2024 could increase home sales, supported by stable values. 

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