U.S. home prices just keep setting new records, although the pace of growth has slowed a bit. S&P CoreLogic’s latest Case-Shiller U.S. National Home Price NSA Index, released Dec. 31, 2024, shows annual home-price growth increased in October 2024 by 3.6 percent. That’s a decrease, albeit slight, from September’s 3.9 percent.
Case-Shiller Index shows price growth has slowed
In addition to the 3.6 percent overall increase, October values also increased annually, but not as fast, by other measures. Case-Shiller’s 10-city index rose 4.8 percent, down from 5.2 percent in September, and the 20-city index was up 4.2 percent, down from 4.6 percent. After seasonal adjustment, all three indices — national, 10-city and 20-city, were up 0.3 percent month-over-month.
Even those tiny increases, though, were enough to continue a record streak: “Our national index hit its 17th consecutive all-time high, and only two markets — Tampa and Cleveland — fell during the past month,” said Brian D. Luke of S&P Dow Jones Indices in a statement.
Regional fluctuation continues
Cities scattered across the East, West and Midwest all earned top-five spots in price growth for October. New York City topped the annual-growth pack once again, with the New York metro area reporting an annual gain of 7.27 percent. The cities with biggest increases were:
- New York City (7.27 percent)
- Chicago (6.24 percent)
- Las Vegas (5.90 percent)
- Cleveland (5.84 percent)
- Washington, D.C. (5.67 percent)
“Markets in Florida and Arizona are rising, but not keeping up with inflation, and are well off the over-10-percent gains annually from 2020 to present. This has allowed other markets to catch up,” said Luke. The metro area that saw the slowest rate of year-over-year growth was Tampa, at 0.39 percent.
Historically, the picture has looked different. For 20 years — July 2004 through July 2024 — Seattle had the highest appreciation at a huge 198 percent. Other strong performers included Dallas (up 158 percent in two decades) and Charlotte (up 148 percent). Just outside the top five were Phoenix, Miami and Tampa, all of which experienced home price gains of 142 percent over the past 20 years. Those three markets were flooded with new arrivals during the pandemic.
Nationally, appreciation was 114 percent. Meanwhile, cumulative inflation was 66 percent over that timeframe.
The bottom five included Cleveland (64 percent appreciation over two decades) and Detroit (57 percent), both of which have been struggling for decades with the decline of the manufacturing sector. Minneapolis (54.8 percent), Las Vegas (54.5 percent) and Chicago (46 percent) also ranked at the bottom of the pack.
The Fed and the housing market
The Federal Reserve announced its first interest-rate cut in years in September 2024, and two more followed by the time the year was done. But before that, its aggressive moves to combat inflation — with 10 consecutive rate hikes over 2022 and 2023 — put upward pressure on mortgage rates, even as inflation declined. While the Fed doesn’t directly set mortgage rates, the mortgage market’s interpretations of the central bank’s moves influence how much you pay for your home loan.
The long period of low mortgage rates following the Great Recession came to an end in 2022. In June 2022, rates topped 6 percent for the first time since 2008. The upward trend continued through October 2023, when rates hit a 23-year high of 8 percent.
Higher rates also exacerbate the housing shortage, stopping many homeowners from selling when they otherwise might — and thus keeping those homes off the market and out of the supply of available housing.
The remarkable rise in mortgage rates is acting as a kind of golden handcuffs.
— Mark Hamrick, Bankrate Senior Economic Analyst
“The remarkable rise in mortgage rates is acting as a kind of golden handcuffs,” says Mark Hamrick, Bankrate’s senior economic analyst. Higher rates are “limiting the desire and some of the ability of people to move out of the homes they currently own. That further pressures housing inventory, adding insult to supply injury.”
While that effect may ease up as the market adjusts and mortgage rates inch downward, for now rates remain relatively elevated: As of Dec. 31, 2024, Bankrate’s weekly lender survey puts the average 30-year mortgage rate at 7.04 percent.
What the Case-Shiller Index means for homebuyers and sellers
The current market has proved challenging on both sides of the real estate transaction — and unless we see a significant drop in either home prices or mortgage rates, both buyers and sellers will need to go with the flow. “For prospective sellers, the new status quo dictates they remain flexible on price,” Hamrick says.
“Those who are very motivated to purchase a home should be prepared for the sticker shock associated with the increased expense of financing the purchase,” he says. “Part of the flexibility that may be required includes seeking a possible downgrade of footprint or quality of home, along with the neighborhood, in order to achieve an affordable purchase.”
Robert Frick, corporate economist with Navy Federal Credit Union, sees reason for hope in even a slight Case-Shiller drop: “Maybe we’re finally seeing a sustained deceleration in price increases,” he said. “With mortgage rates up recently, the price drop will be lost in overall housing affordability. But together with lower mortgage rates [this] year, as many are forecasting, a slowdown in price increases could mean markedly improving conditions for buyers in 2025.”
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