Home Prices Hit Record High Even As Mortgage Rates Soared

The highest mortgage rates of the twenty-first century did not keep home prices from surging in October.

Home prices in October were up 4.9 percent compared with a year ago, the strongest pace of gains in 2023, according to the S&P CoreLogic Case-Shiller 20-city house price index. Compared with a month earlier, home prices rose 0.6 percent.

That was an acceleration from the four percent 12-month gain in September. It was in line with what economists had forecast.

The 10-city composite index, which is based on home prices in the biggest metro areas, rose 5.7 percent over the past year, up from a 4.8 percent rise in the previous month.

The national index rose is up 4.8 percent over the past year after rising 0.6 percent in October.

The 20-city index and the national index are at an all-time high.

Mortgage rates topped eight percent in October, the highest since the summer of 2000. Home prices have continued to defy predictions that higher rates would bring them down or at least stop their rise. October was their ninth straight monthly rise.

“Home prices leaned into the highest mortgage rates recorded in this market cycle and continued to push higher.  With mortgage rates easing and the Federal Reserve guiding toward a slightly more accommodative stance, homeowners may be poised to see more appreciation,” said Brian D. Luke, Head of Commodities, Real & Digital assets at S&P DJI.

Mortgage rates rose as the Federal Reserve aggressively increased its short-term interest rate target. The Fed has not raised rates since July and recently signaled plans to cut rates next year. Mortgage rates have fallen in November and December.