Record High Home Prices in 2023

As 2023 came to a close, home prices surged to unprecedented heights, driven by a dwindling supply of existing homes due to rising mortgage rates.

Strong Growth in Prices

• The S&P CoreLogic Case Shiller Home Price Indices reported a 6.1% year-over-year increase in prices across 20 major cities, surpassing expectations with a 5.9% rise.
• Nationally, home prices saw a 5.5% increase on a seasonally-adjusted basis, reaching a historic peak in December.

Expert Analysis

Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices, commented on the remarkable growth trend observed in 2023. He noted that the year’s 5.5% price gain outpaced the previous 35-year average of 4.7%, signaling robust and consistent progress.

Market Trends

• The 5.5% price upturn marked the strongest year-end surge since the previous December, although it fell short of the significant gains seen during the pandemic.
• San Diego, Los Angeles, and Detroit experienced the most rapid price growth, while Portland, Ore., Dallas, and Denver saw slower increases.

Future Projections

Despite a slight month-over-month uptick of 0.2% in prices from November to December, experts expected a more modest 0.15% climb in the 20-city index, pointing towards continued market shifts in the coming year.

Housing Market Update

The National Association of Realtors reported a 5.1% gain in the median existing-home price compared to a year ago in January. This growth, the fastest since October 2022, outpaced wage gains for the first time in over a year. However, despite the surge in prices, existing-home sales remained slow, with a seasonally adjusted annual rate of 4 million.

Inventory Challenges

The combination of high price growth and low sales volume has highlighted the issue of scarce inventory for homes listed for sale. With only three months needed to sell every home listed at the end of January, there is a clear imbalance between supply and demand affecting the market’s dynamics. According to NAR’s Chief Economist Lawrence Yun, the course of home prices this spring will largely depend on supply levels.

Impact on New Home Sales

In contrast, the new home sales market saw some improvement in January. Sales increased by 1.5% to a seasonally adjusted annual rate of 661,000, showcasing the impact of increased supply on prices. However, despite the uptick in sales, it would take over eight months to sell every new home listed at the pace seen in January. The median price for new homes dropped by 2.6% to $420,700 compared to January 2023.

Redfin’s Insights

Redfin’s data revealed that housing prices have remained robust. The median sale price in metros tracked by the brokerage reached $365,000 in the latest four-week period, marking an approximate 6% increase from the previous year. Furthermore, homes entering the market were priced just below $400,000.

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