US CoreLogic S&P Case-Shiller Index Signals A Market Shift

While home prices have shown a lot of strength so far in 2023, elevated mortgage rates are making it difficult for many potential buyers to purchase properties, which will likely keep a lid on additional gains for the rest of the year. Nevertheless, home prices are still expected to continue to reaccelerate and reach mid-single-digit growth rate by the year’s end, according to CoreLogic’s latest Home Price Index forecast.

Acceleration in home prices was most notable in markets that remained relatively affordable throughout the pandemic and that saw less shifts as a result of household migration, such as those in the Midwest and New England. Home prices in these markets are now catching up with traditionally more expensive ones.  

In June, the CoreLogic S&P Case-Shiller Index remained flat year over year. However, this reflects price drops that occurred in 2022. (Figure 1).

Figure 1: June home prices show no annual growth

The non-seasonally adjusted, month-over-month index posted its fifth month of gains, up by 0.9% in June. This is a smaller increase than the one recorded in May (1.3%), as price gains are plateauing in response to higher mortgage rates. With five months of monthly gains, home prices are now up by 5% from February of this year and are even with their 2022 peak. (Figure 2).

Figure 2: Month-over-month prices increases exceed average in June

In June, 13 metros saw annual home price gains pick up steam from the month before, with the most notable reacceleration in West Coast markets, particularly San Diego and Seattle, followed by San Francisco and Los Angeles (Figure 3).

Figure 3: 20 Metros indicate a pivot in annual declines

“While home prices have remained strong in 2023, elevated mortgage rates complicate the situation for potential homebuyers, a trend that will likely constrain additional price gains for the rest of the year. Nevertheless, home prices are still expected to reaccelerate and reach mid-single-digit growth rate by the end of the year, according to CoreLogic’s latest HPI forecast,” said Dr. Selma Hepp, CoreLogic chief economist.    

“Home price acceleration is most notable in markets that remained relatively affordable throughout the pandemic and saw less volatility from household migration, such as those in the Midwest and New England. Home prices in these markets are now catching up with more expensive ones,” Hepp added.