US CoreLogic S&P Case-Shiller Index: September Growth Falls To 3.9% YOY

Home prices continued to cool in September as homebuyers struggled with inflation fatigue. Inflation has affected both goods and other services as well as housing prices, which are now 51% higher than at the start of the pandemic.

When higher prices are coupled with persistently elevated mortgage rates and adjusted for inflation, a typical mortgage payment, only including principal and interest, is now 82% higher than pre-pandemic. That doesn’t include rising costs of property taxes and insurance.

In September, home prices weakened more notably in western markets and larger metro areas, which have grown increasingly more unaffordable in recent years. In contrast, affordable markets in the Midwest and Desert West continue to squeeze out home price gains.

September marked the sixth consecutive month of slowing annual appreciation. While home prices are still hitting new highs month after month, the CoreLogic S&P Case-Shiller Index slowed to a 3.9% year-over-year gain after peaking at 6.5% in both February and March of this year. Additional cooling is expected though the middle of next year before home price growth picks up again.

The latest CoreLogic Home Price Index report forecasts home price gains slowing to 2.3% by next August. The non-seasonally adjusted, month-over-month index recorded a 0.1% decline in September, well below the average 0.12% September increase recorded between 2015 and 2019 (Figure 2) and is in clear contrast to the 0.3% monthly increases recorded in September 2023.

Home prices slowed notably this summer and fall compared with last year as the jump in mortgage rates started weighing more heavily on housing demand. This is the first September to post a monthly decline since the summer of 2022 when mortgage rates experienced their initial surge. Nevertheless, the rate of monthly declines appears to be flatting out at 0.1%.

The 10-city and 20-city composite indexes also posted their 15th straight month of new peaks in September, with annual growth cooling to 5.2% and 4.6% from the March peak of 8.3% and 7.5%, respectively.

Compared with the 2006 peak, the 10-city composite index is now 55% higher, while the 20-city composite is up by 62%. Adjusted for inflation, which is showing signs of easing, the 10-city index is now 5% higher than its 2006 level, while the 20-city index is up by 10% compared with its 2006 high point. When adjusted for inflation, national home prices are 19% higher compared with 2006. Inflation-adjusted prices haven’t shown the same level of appreciation as nominal prices given elevated inflation in recent years.