Competition heats up for a limited supply
Home prices in the US accelerated in December as increased buyer activity sparked competition for a limited supply of homes, according to the latest S&P CoreLogic Case-Shiller data.
A national measure of home prices rose 3.9% from a year earlier, up from November’s 3.7% annual increase. The index, which accounts for seasonal adjustments, has now hit a record high for the 19th consecutive month.
Bloomberg reported that the market has been adjusting to mortgage rates that have remained above 6.5% since late October. While the inventory of homes for sale has been rising, supply remains constrained in many areas, leading to bidding wars, particularly in high-cost coastal markets.
A separate measure tracking home values in 20 major cities showed a 4.5% increase in December compared to the previous year, an acceleration from November’s 4.3% gain. New York led the nation with a 7.2% year-over-year price increase, followed by Chicago at 6.6% and Boston at 6.3%.
“Through this recent market cycle, the ability of Americans to grow wealth by participating in the upside of the US housing market, particularly if done through a leveraged position by securing a mortgage, has proven to be historically beneficial,” Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, said in a statement.
Despite rising prices, home sales have been sluggish, and some listings have remained on the market for longer periods, prompting sellers to offer discounts, Bloomberg noted.
“Stifled buyer demand does not typically imply climbing home prices,” said Hannah Jones, senior economic research analyst at Realtor.com. “In fact, listing prices have eased in recent months as sellers look to attract buyers and more small, affordable homes come up for sale. However, despite trends toward lower listing prices, higher-priced homes continue to sell, driving sales prices higher.”
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