Record Home Price Growth in 2023

by Warren Seah

Home prices in 2023 have exceeded their average gain over the past three decades, showcasing positive growth trends in the real estate market.

Strong Price Growth

According to the S&P CoreLogic Case Shiller Home Price Indices, prices surged by 6.1% from year-ago levels in 20 of the nation’s largest cities, surpassing the 5.4% increase seen in November. This notable increase outperformed FactSet consensus estimates of a 5.9% rise, with national prices showing a 5.5% gain.

Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices, commented on this significant development, stating, “2023 appears to have exceeded average annual home price gains over the past 35 years.” With a trend growth rate of 4.7% at the national level, the 5.5% return indicates solid and steady growth in the housing sector.

Month-Over-Month Performance

Following seasonal adjustments, prices saw a 0.2% uptick in November from December, both at the national level and within the 20-city index. Economists surveyed by FactSet had anticipated a 0.15% month-over-month increase in the 20-city index.

Continued Upward Trajectory

As we move into the new year, home prices are expected to maintain an upward trajectory due to a low supply of homes for sale. The latest data indicates a strong finish to 2023, setting a positive tone for the market’s performance in the coming months.

Stay tuned for more in-depth analysis as we delve into these latest developments shaping the real estate landscape.

Home Prices Rise as Inventory Remains Scarce

The National Association of Realtors reported a 5.1% increase in the median existing-home price compared to last year. This growth outpaced wage gains for the first time in over a year. Despite this, existing-home sales remained slow, with a seasonally adjusted annual rate of 4 million.

Limited Inventory Raises Prices

With high price growth and low sales volume, it would take three months to sell every home listed at the end of January. NAR chief economist Lawrence Yun emphasized that the spring’s home prices depend heavily on supply.

Impact of Supply on Prices

New home sales saw a 1.5% increase in January, reaching a seasonally adjusted annual rate of 661,000. However, it would take over eight months to sell every new home listed at this pace. The median new home price in January was $420,700, showing a 2.6% decrease from January 2023.

Steady Price Trends

According to Redfin, prices in metros tracked by the brokerage maintained their strength. The median sale price stood at $365,000 for the four weeks ending Feb. 18, marking a 6% increase from the previous year. New listings entered the market with an asking price just below $400,000.

Remember to stay informed with the latest updates in the real estate market!

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