The Case-Shiller home price index results are in for December, and the numbers are fairly in line with expectations – year over year, home prices continue to rise slowly despite economic headwinds and affordability concerns that have left many potential buyers on the sidelines.

Month over month, seasonally adjusted numbers also show increases in home price nationally, however without seasonal adjustments, values slipped (fairly normal for this time of year).

This report signals what we’re seeing nationally – home prices continue to climb overall, with some areas seeing price drops while others see a market still starved of home inventory.

Data supports mortgage rates being a major factor in market activity, with the expectation being that mortgage rates continuing to fall will likely continue to pressure home prices upward since inventory is still not in line with pre-pandemic balance. Just today, many headlines reported mortgage rates below 6% for the first time since 2022, and with this reduction in rates expected continue, more buyer demand should come to market as we head into the Spring season.

Case-Shiller is considered the best measure of home price data nationally as it includes all residential real estate sales transactions, as opposed to some other gauges like FHFA which only include financed transactions using conventional loans.

While home price increases don’t sound great for potential buyers, it’s important to realize that the +1.4% year over year change is well below the rate of inflation, and represents a healthy increase as a “normal” year typically sees home prices climb 3-4%, usually slightly above the target Fed inflation rates.

Regionally, home price data is a little more dynamic, with some markets (like the mid-atlantic and parts of New England) still seeing sharp price increases amidst low home inventory, where other markets (those who saw sharp outlying price increases during the pandemic) are seeing price reductions and higher inventory levels as the markets reset toward balanced prices.

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