The S&P CoreLogic Case-Shiller Home Price Index reported that national home prices rose by 6.5% year-over-year in March, with a seasonally adjusted monthly increase of 0.3%. Brian D. Luke, Head of Commodities, Real Assets, and Digital Assets at S&P Dow Jones Indices, stated, “This month’s report marks a new record. Over the past year, we have witnessed record highs in both the stock and housing markets.” He noted that the Case-Shiller National Index set new records in six out of the last twelve months, while the S&P 500 Index achieved record highs on 35 trading days.

These gains in asset classes have increased household wealth, leading to a new high in total household wealth in the first quarter of 2024. However, the surge in home prices has left many potential buyers feeling frustrated, believing that the dream of homeownership is becoming increasingly unattainable.

Among the 20 metropolitan areas tracked by the index, San Diego recorded the largest annual home price increase, rising by 11.1% over the past year. Following closely were New York City (9.2%), Cleveland (8.8%), and Los Angeles (8.8%). Luke highlighted that the nation’s two largest cities, New York and Los Angeles, have shown significant recovery since the COVID-19 pandemic, keeping pace with the composite index tracking the 20 largest cities. He added that home prices in San Francisco and Seattle remain below their pre-pandemic peaks, currently down by 9.7% and 8.2%, respectively, from their May 2022 highs.

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Regionally, the Northeast experienced the fastest home price growth nationwide, with an annual increase of 8.3%. In contrast, cities in the Sunbelt, such as Tampa, Phoenix, and Dallas, which saw substantial price surges in 2020 and 2021, have experienced slower growth rates recently. Luke remarked, “The COVID-19 pandemic benefited Sunbelt markets, but northern metropolitan areas have seen greater gains in recent years.”

Among the 20 cities tracked, Denver and Portland, Oregon, had the smallest annual price increases, at 2.1% and 2.2%, respectively. Ralph McLaughlin, Senior Economist at Realtor.com, noted, “Home prices in the Midwest and Northeast have been climbing annually, making these regions popular markets for buyers. The April report on the hottest housing markets and rents highlights this trend. Southern markets have slower price growth due to relatively abundant new and existing inventory, which helps alleviate price pressure in those areas.”

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Thomas Ryan, North American Economist at Capital Economics, wrote in a report that the observed price increases in March “indicate that competition among buyers for the limited number of existing homes on the market remains fierce.” Ryan expects this situation to persist through the end of the year and projects annual home price increases of 3% and 2.5% in 2025 and 2026, respectively. He noted that although mortgage rates may decrease in the coming years, the gradual normalization of inventory should help cool the market.

Realtor.com's data show that in April, the affordable inventory of homes priced between $200,000 and $350,000 increased by 41% year-over-year, which is good news for potential buyers. McLaughlin added, “While inventory remains tight, seller activity continued to heat up early in the spring, with a year-over-year increase of 30.4% in April, partly due to a 12.2% rise in new listings for the month. Although this is certainly good news for inventory-constrained buyers, recent increases in mortgage rates and inventory levels far below pre-pandemic levels present another challenging season for those looking to buy a home.”