S&P CoreLogic Case-Shiller Index Records 3.6 Percent Annual Gain in Home Prices

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Home prices across the United States increased in October 2024, with the cities of New York, Chicago, and Las Vegas seeing the largest price gains, according to financial services company S&P Global.

A leading measure of U.S. residential property prices, the S&P CoreLogic Case-Shiller Index recorded an annual gain of 3.6 percent in October 2024, slightly down from the previous annual gains in 2024, according to a Dec. 31 statement from the company. This was down from 3.9 percent in September. The index measures price changes of single-family homes across nine U.S. Census divisions.

According to Brian D. Luke, head of commodities-real and digital assets, “the annual returns continue to post positive inflation-adjusted returns but are falling well short of the annualized gains experienced this decade.”

“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,” he said.

The highest annual gain, among 20 cities tracked by the company, was in New York, which saw a 7.3 percent hike in October. This was followed by Chicago and Las Vegas.

New York annual returns were more than double the national average, Luke noted, and the city saw the biggest annual price gains in the past six months. San Diego had the top spot for the prior six months.

Meanwhile, a report from real estate brokerage Redfin showed that U.S. home prices rose by 5.7 percent in November on an annual basis, which was the lowest annual increase since October 2023.

“Home prices are likely to keep rising steadily throughout 2025 at a similar pace to this year,” said Redfin senior economist Sheharyar Bokhari.

“Elevated mortgage rates will cause many homeowners to hang onto their homes—and the low rates they have locked in. That means there will be enough buyers competing over a relatively low number of homes to keep prices ticking up consistently.”

Construction Activity, Mortgage Rate Pressure

The higher prices come as spending on residential construction rose by 3.2 percent in November from a year back, according to data from the U.S. Census Bureau.

The largest jump at 12.2 percent was in public residential construction spending, while private construction increased by 3.1 percent. However, within private construction, the spending on new single-family and multifamily construction registered annual declines.

Robert Dietz, chief economist at the National Association of Home Builders (NAHB), blames regulations and local opposition to construction projects for having created “significant headwinds for builders to construct affordable housing in urban centers.”

“Policymakers at all levels of government need to eliminate excessive regulations, ease permitting roadblocks, and promote careers in the skilled trades to allow builders to construct more homes and apartments across the nation,” he said.

NAHB chairman Carl Harris said that builders have expressed concerns about high interest rates and are expecting some regulatory relief from the upcoming administration change in Washington.

Elevated mortgage rates dampen demand from prospective homebuyers, thus making builders hesitant to construct new homes.

Over the past two years, the weekly average rate on a 30-year fixed-rate mortgage has not fallen below 6 percent, creating an affordability crisis for buyers. The rates are touching 7 percent, according to the latest data from Freddie Mac.

The Federal Reserve has cut down its benchmark interest rates by 1 percentage point since September. However, this has not brought down mortgage rates. Instead, the 30-year mortgage rate, for example, has risen.

For 2025, Fannie Mae is predicting mortgage rates to decline “modestly” but remain above the 6 percent level.

There could be periods of temporary lows in rates, which would present an opportunity for buyers, said Fannie Mae chief economist Mark Palim. However, not all is doom and gloom for buyers.

“While we foresee the current affordability crunch hampering activity through our forecast horizon, we expect nominal wage growth will outpace home price growth for the first time in more than a decade in 2025, slowly but surely providing some much-needed relief to potential homebuyers,” he said.