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 Tuesday. That is up from the 5.1% annual increase recorded the prior month. On a monthly basis, prices actually fell 0.4% on a seasonally adjusted basis, according to the index.
The 10-city composite, which encompasses Los Angeles, Miami and New York, rose 7% annually, compared with an increase of 6.1% in November. The 20-city composite, which also tracks 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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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 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.
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. But 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.
