In recent times, the U.S. real estate market has once again reached new highs, particularly in September. Due to a shortage of available homes for sale, housing prices set a new record in September, even with the reduced affordability of home purchases due to higher interest rates.
According to the S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the U.S., prices in September increased by 3.9% compared to the same period last year, while the year-over-year increase for the previous month was 2.5%. September's level is the highest the index has seen since its inception in 1987. After seasonal adjustments, the index rose by 0.7% month-on-month in September.
It's worth noting that higher interest rates did not lead to a decline in housing prices, as the housing inventory in the market is exceptionally low. The higher rates prompted potential sellers to stay put, unwilling to give up the low-interest rates on their existing mortgages.
Furthermore, data from the National Association of Realtors indicates that the median sales price for existing homes in October increased by 3.4% compared to the same period last year, reaching $391,800. This implies that while demand has decreased, resulting in a slight decline in home sales compared to a year ago, housing prices have not followed suit.
Meanwhile, the growth in the U.S. real estate market is also impacted by higher mortgage rates. After reaching a new high in October, mortgage rates have slightly decreased in recent weeks, which is expected to slow down the pace of housing price growth in the coming months.
The growth in the real estate market is not only influenced by interest rates but also by housing inventory and demand. Selma Hepp, Chief Economist at CoreLogic, stated, "The acceleration in the year-over-year growth rate of home prices reflects demand suppressed in a market with extremely low inventory."
As housing prices rise, potential buyers are being pushed out of the market, leading to a decline in home sales. However, due to the exceptionally low housing inventory in the market, a decrease in demand has not resulted in a decline in housing prices.
