Home Prices Continue To Rise As Inventory Lags

The growth rate of home prices increased for the third month in a row this September.

Redfin reported that home prices rose by 0.5% from August and by 6% on a year-over-year basis. That’s the lowest annual increase since December, but the fastest month-over-month growth rate since April. 

Redfin’s Home Price Index (RHPI) measures the sale prices of homes during a given period, compared to the sale prices for those same properties the last time they were sold.

Mortgage affordability improved in September when rates dropped as low as 6.08%, analysts with Redfin pointed out, but home prices have continued to tick up because buyer demand still outweighs supply. 

“There are around 20% fewer homes on the market today than there were five years ago, mainly because so many homeowners locked in a low mortgage rate during the pandemic,” said Redfin Senior Economist Sheharyar Bokhari. “With mortgage rates back above 6.5% this month— and unlikely to drop below 6% this year— home prices will likely continue their consistent climb until more inventory comes onto the market in the spring.”

On a regional basis, 13 of the 50 most populous U.S. metro areas recorded a seasonally adjusted drop in home prices this September, month over month. 

Metros that saw home prices decline the most included San Antonio, Texas (-1%), Fort Lauderdale, FL (-0.9%), and Fort Worth, Texas (-0.5%). 

The highest month-over-month gains were recorded in Nassau County, N.Y. (1.7%), Philadelphia (1.6%), and Virginia Beach, Va. (1.4%).

Redfin’s latest home price data is in line with reports from other institutions. 

Single-family home prices increased 5.9% from Q3 2023 to Q3 2024, according to the latest reading of the Fannie Mae Home Price Index (FNM-HPI). This was a deceleration compared to the previous quarter’s downwardly revised annual growth rate of 6.4%.