Home prices hit a new all-time high in December

Home prices rose for the 11th consecutive month in December, as housing inventory remained painfully low.

Prices increased 5.5% nationally in December when compared with the previous year, the S&P CoreLogic Case-Shiller index showed on Tuesday. That is up from the 5% annual increase recorded the prior month. On a monthly basis, prices fell 0.4%, according to the index.

The 10-city composite, which encompassed Los Angeles, Miami and New York, rose 7% annually, compared with an increase of 6.3% in November. The 20-city composite, which also tracked housing prices in Dallas and Seattle, posted an annual gain of 6.1%, which also marks an increase from the 5.4% figure recorded the previous month.

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Homes in Rocklin, California, on Dec. 6, 2022. (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)

There was a major discrepancy in the price gains in the 20 cities: San Diego reported an 8.8% annual gain in December, followed by Los Angeles and Detroit, each with an 8.3% increase. Portland, Oregon, saw the smallest gain in December, with home prices climbing just 0.3% from the prior year.

However, it marked the first time in 2023 that all 20 cities reported a year-over-year gain.

“While we are not experiencing the double-digit gains seen in the previous two years, above-trend growth should be well received considering the rising costs of financing home mortgages,” said Brian Luke, head of commodities, real and digital assets at S&P DJI, in a release.

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The Case-Shiller index reports with a two-month delay, meaning it may not capture the latest ongoings in the market. 

A house is for sale in Arlington, Virginia, on July 13, 2023. (Photo by SAUL LOEB/AFP via Getty Images / Getty Images)

The interest-rate-sensitive housing market entered a deep freeze last year in the wake of the Federal Reserve’s aggressive interest-rate hike campaign. However, prices have quickly recovered as buyers adjust to higher mortgage rates and compete for a limited supply of homes. 

The problem is unlikely to be resolved anytime soon. With mortgage rates hovering near the highest level in two decades, sellers who locked in a low rate before the pandemic began have been reluctant to sell, leaving few options for eager would-be buyers.

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Available home supply is still down a stunning 34.3% from the typical amount before the COVID-19 pandemic began in early 2020, despite a recent drop in mortgage rates, according to a separate report published by Realtor.com.