The housing market in the United States is off to a roaring start in 2024, with home price growth hitting a 14-month high in January. According to the latest data from the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, home prices surged by 6.0% annually in January, up from a 5.6% rise in the previous month. This marks the highest level of growth since November 2022, signaling a robust resurgence in the housing sector.
Leading the charge in this housing boom is San Diego, which emerged as the hottest market with an impressive 11.2% growth in January. Following closely behind are Los Angeles with an 8.6% increase and Detroit with an 8.2% rise. These cities exemplify the strong demand and limited inventory driving up home prices across the country.
However, while some cities are experiencing double-digit gains, the overall 20-city index fell slightly short of economists’ projections. The index recorded a growth of 6.6% in January, just below the anticipated 6.7%. This discrepancy highlights the nuanced nature of the housing market, with varying trends and dynamics at play in different regions.
Commenting on the latest data, Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices, reflected on the overall performance of the housing market in 2023. “Homeowners most likely saw healthy gains in the last year, no matter what city you were in, or if it was in an expensive or inexpensive neighborhood,” Luke noted. “No matter which way you slice it, the index performance closely resembled the broad market.”
Indeed, 2023 proved to be a favorable year for homeowners, with rising property values contributing to increased wealth accumulation. However, Luke also acknowledged the persistent challenge of affordability in the housing market. “On a monthly basis, home prices continue to struggle in the face of elevated borrowing costs,” he stated.
This concern is particularly pronounced in certain markets, where affordability constraints are more pronounced. In the last month, seventeen markets experienced a decline in home prices, underscoring the uneven nature of the housing recovery. Minneapolis, in particular, saw a notable 2.4% decline over the prior three months, highlighting the variability in local market conditions.
Looking ahead, the trajectory of home prices will likely be influenced by a combination of factors, including interest rates, housing supply, and economic conditions. While the current momentum in the housing market is undeniable, challenges persist, particularly in ensuring housing affordability for all segments of the population.