The price of residential real estate has risen in most markets since a decades-long bottom during the Great Recession. That has started to slow in some cities because of oversupply and rising mortgage rates. However, in 10 of the largest markets in the U.S. based on population, prices are still up over 6% during the last year.
S&P CoreLogic Case-Shiller Indices measure monthly housing prices in the 20 largest markets in the U.S. Case-Shiller began tracking prices in January 2000, and each market’s prices are indexed against that to get the 18-year trend.
Nationwide, housing prices where were up 5.5% annually in October when compared with September (all nine Census areas). The September index was up by 5.5% as well. Prices moved up more slowly in the top 20 markets. They rose by 5% over September, The September increase over the previous month was 5.2%.
Commenting on the data, David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, said, “Home prices in most parts of the U.S. rose in October from September and from a year earlier. The combination of higher mortgage rates and higher home prices rising faster than incomes and wages means fewer people can afford to buy a house. Fixed-rate 30-year mortgages are currently 4.75%, up from 4% one year earlier. Home prices are up 54%, or 40% excluding inflation since they bottomed in 2012. Reduced affordability is slowing sales of both new and existing single-family homes. Sales peaked in November 2017 and have drifted down since then. ”
Blitzer added that one market that suffered most during the last housing collapse, most notably Las Vegas, was helped by a diversified economy over the last decade. This diversity helped the employment rates surge. These factors enabled the price of Las Vegas real estate to climb 12.8% in October compared with the same month in 2017. The next two cities based on price increases by the same measure were San Francisco at 7.9% and Phoenix at 7.7%. The slowest growing market was Washington at 2.9%.
Finally, there is a vast disparity in housing price growth since Case-Shiller started its records in January 2000. The research firm designated a price index of 100 to the top 20 cities, at that point. Today, the Los Angeles market has grown the most to an index of 283.03. The Cleveland market sits at 123.85. Over the same period, the national index has gone to 206.03, and the top 20 markets have moved up to 213.89.
The 10 Fastest Growing Housing Markets
|Metropolitan Area||Oct. 2018 level||Oct.-Sept. Change||1-year change|
Sources: S&P Dow Jones Indices and CoreLogic