Shortage of Properties Pushes US Home Prices to New Record High

Real estate sales may have dwindled since the pandemic, but the few homes that are still selling are going for record-high prices.

A leading measure of single-family home prices — the S&P CoreLogic Case-Shiller U.S. National Index — rose in September at the fastest pace of 2023, gaining 3.9% from a year ago. It was the third consecutive month of year-over-year increases, pushing the index to the highest level ever recorded, S&P Dow Jones Indices said on Tuesday.

Prices rose even as mortgage rates headed toward a 23-year high and home sales slowed to the lowest level in more than a decade — two factors that tend to reduce rather than increase the competition for properties. A shortage of listings, made worse by people who locked in super-low rates during the pandemic and are refusing to move, is keeping buyers on their toes and ready to bid higher.

“Although this year’s increase in mortgage rates has surely suppressed the quantity of homes sold, the relative shortage of inventory for sale has been a solid support for prices,” Craig J. Lazzara, managing director at S&P Dow Jones Indices, said in a statement about the latest reading.

The average interest rate on a 30-year fixed mortgage rose to 7.79% in October, the highest in 23 years, according to Freddie Mac data. That’s more than double the rates seen in the first two years of the COVID-19 pandemic, in 2020 and 2021.

Home sales fell last month to the lowest level in 13 years, according to the National Association of Realtors. There were 1.15 million homes on the market in October, the lowest for any October in NAR records going back to 1999.