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US home prices continued their rally in September

Detroit surpassed Chicago as the city with the highest annual price gain

Home prices rallied in September, as homebuyers still outnumbered sellers. 

Home prices posted a 3.9% annual gain in September, up from a 2.5% gain in the previous month, according to the S&P CoreLogic Case-Shiller Home Price Index. Month-over-month, the U.S. National Index, the 10-City and 20-City Composites each posted seasonally adjusted gains of 0.7%, down from 0.8% in August.

This marks the third month in a row of price gains and the highest year-over-year increase in the index since last December, according to Bright MLS Chief Economist Lisa Sturtevant

“U.S. home prices continued their rally in September 2023,” Craig Lazzara, managing director at S&P DJI, said in a statement.“Our National Composite rose by 0.3% in September, marking eight consecutive monthly gains since prices bottomed in January 2023. The Composite now stands 3.9% above its year-ago level and 6.6% above its January level. Our 10- and 20-City Composites both rose in September, and likewise currently exceed their year-ago and January levels.”

In September, existing home sales fell, while pending home sales and new home sales rose compared to the previous month. Mortgage rates climbed over the period, reaching 7.3% by the end of September. Low levels of existing home inventory contributed to keeping home prices elevated. 

Detroit surpassed Chicago as the city with the highest annual gain in home prices

Detroit posted an annual increase of 6.7% in September, the highest among the 20 cities studied. Only three of the 20 cities reported lower year-over-year home prices.

Detroit (+6.7%), San Diego (+6.5%), and New York (+6.3%) were the three best-performing metropolitan areas in September. The worst-performing metropolitan areas were Las Vegas (-1.9%), Phoenix (-1.2%), and Portland (- 0.7%).

The Case-Shiller index measures repeat sales data and reflects a three-month moving average, meaning that it tracks homes that went into contract in July, August and September.

Home prices are expected to slow in the fourth quarter of 2023

Higher rates combined with a typical seasonal slowdown should push down the number of buyers on the market. Simultaneously, new listing volume is up at the end of November, which might cool home prices down. 

“Home prices are feeling the weight of high mortgage rates which will slow the rate of price growth in the coming months,” CoreLogic Chief Economist Selma Hepp said in a statement.

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