Kiplinger Housing Outlook: House Price Gains Cooled in November

Easing mortgage rates should give the housing market a lift this spring.

illustration of stylized house
(Image credit: Getty Images)

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Home price growth slowed in November, but the slowdown isn’t likely to last. The S&P CoreLogic Case-Shiller National Home Price Index, which measures the prices of existing homes across the nation, rose 5.1% in November from a year ago, up from 4.7% the previous month. On a month-over-month, seasonally adjusted basis, home prices rose just 0.2% – the smallest monthly increase since February 2023. Looking ahead, the lack of inventory in the housing market will push home prices higher as demand continues to recover.

Residential construction took a breather in December.
Total housing starts fell 4.3% to 1.53 million annualized units. Single-family starts fell 8.6%, while multifamily starts rose 8% during the month. Single-family permits rose 1.7% from the previous month, while multifamily permits rose 2.2%. The modest gain in single-family permits over the past few months, and the recent jump in builder confidence, suggest that single-family construction will continue to gradually increase in the coming months. Meanwhile, multifamily developers look to be hitting the brakes amid more restrictive credit conditions and softer demand for apartments. Apartment vacancy rates have turned higher over the past year as demand has continued to normalize and the supply of new multifamily developments has continued to increase. 

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New home sales ended the year on a high note.
They rose 8% in December to a seasonally adjusted annual rate of 664,000 units. Sales rose in the South, the Northeast and the Midwest, but fell in the West. Overall, new home sales averaged 668,000 units in 2023, up from 641,000 units in 2022. A recent recovery in home buyer sentiment and mortgage applications for purchase have contributed to rising optimism among homebuilders about the spring selling season. A low inventory of existing homes means that demand for newly built homes will stay robust in 2024, even as mortgage rates start to fall. 

Existing home sales resumed their downward trend in December.
Sales of previously owned homes fell 1% to 3.78 million annualized units. The low level of sales shows that stretched affordability continues to weigh on demand for existing homes. Falling mortgage rates should help on that front, though. The average 30-year, fixed-rate mortgage rate fell to 6.81% in December from 7.44% in November. Meanwhile, the inventory of existing homes on the market fell 11.5% from a year ago. This translates to 3.2 months’ worth of supply at the current sales pace, down from 3.5 months in November. 

A modest increase in mortgage applications for home purchases in December suggests that demand will recover over the next few months, as mortgage rates start to come down. Meanwhile, inventory will increase slightly as falling mortgage rates entice more homeowners to put their homes on the market this spring.

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Rodrigo Sermeño
, The Kiplinger Letter

Rodrigo Sermeño covers the financial services, housing, small business, and cryptocurrency industries for The Kiplinger Letter. Before joining Kiplinger in 2014, he worked for several think tanks and non-profit organizations in Washington, D.C., including the New America Foundation, the Streit Council, and the Arca Foundation. Rodrigo graduated from George Mason University with a bachelor's degree in international affairs. He also holds a master's in public policy from George Mason University's Schar School of Policy and Government.