Prices of existing single-family homes are climbing nationwide, but new data shows the rate of the increases may be starting to lose momentum.
Home prices increased 3.6% in October from a year ago, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index released Tuesday. That's a drop from the 3.9% year-over-year gain in September.
As for the median home sales price in the United States, it grew to $420,000 in the third quarter, according to the Federal Reserve Bank of St. Louis.
The home price sales growth in October marks the 17th straight month of increases in the price index, said Brian Luke, head of commodities at S&P Global Indices. Luke also noted that the data released Tuesday is lagging and does not reflect the win by President-elect Donald Trump, a development that could affect pricing.
"Removing the political uncertainty risk has led to an equity market rally," Luke said in a statement. "It will be telling should the similar sentiment occur among homeowners.”
Existing home prices continue to rise, economists say, partly because housing supply has not kept up with demand, particularly in the starter home category. Builders have not added enough new and affordable homes fast enough, partially due to a shortage of skilled labor. Moreover, some homeowners have been reluctant to place their property on the market because they would lose out on the nation's booming home equity growth.
Also, some homeowners have been reluctant to list their property because it might mean having to finance a new home as elevated mortgage rates have flirted with 7% most of this year.
On Tuesday, S&P also released its 10-City Composite Home Price Index and 20-City Composite Home Price Index that cover the nation's largest metropolitan areas. All told, home prices continued to grow in cities on those indexes but at a slower rate compared to one year prior.
Tampa had the slowest annual rate of existing home price growth in October at 0.39% while New York City saw the fastest rise at 7.27%. Chicago had the second-highest price increase rate at 6.24%, according to the city composite indexes.
"New York once again reigns supreme as the fastest-growing housing market with annual returns over double the national average,” Luke said. "Two markets have dominated the top ranks with New York leading all markets the past six months and San Diego the six months prior. New York is the only market sitting at all-time highs and one of just three markets with gains on the month."
Other cities with noteworthy year-over-year rates of home price increases in October included Miami at 3.15% and Phoenix at 1.2%.
"Markets in Florida and Arizona are rising, but not keeping up with inflation, and are well off the over 10% gains annually from 2020 to present," Luke said.