US home prices continued to increase in October 2023, recording the strongest annual gain of the year.

The S&P CoreLogic Case-Shiller US National Home Price NSA Index, covering all nine US census divisions, rose 4.8% year over year in October 2023, up from a 4% increase in the previous month after seasonal adjustment — and the highest yearly increase since the 5.7% year-over-year change recorded in December 2022.

The 20-City Composite recorded an annual increase of 4.9%, up from a 3.9% increase in September 2023. The 10-City Composite rose 5.7%, compared to a 4.8% increase in the previous month.

On a month-over-month basis, the US National Index, the 10-City and 20-City Composites each posted increases of 0.6% after seasonal adjustments.

"Home prices leaned into the highest mortgage rates recorded in this market cycle and continued to push higher," said Brian Luke, head of commodities, real & digital assets at S&P Dow Jones Indices, in a statement. "With mortgage rates easing and the Federal Reserve guiding toward a slightly more accommodative stance, homeowners may be poised to see more appreciation."

Among the 20 cities in the index, Detroit was the fastest-growing market for the second month in a row, registering an 8.1% annual gain, followed again by San Diego and New York with 7.2% and 7.1% increases, respectively.

Mortgage rates continue to drop in December 2023

US mortgage rates continued to decline in December, dropping below 7.0% for the first time since Aug. 21, 2023.

The interest rate on a 30-year fixed conforming mortgage averaged 6.94% as of Dec. 29, 2023, down from 7.38% as of Nov. 29, 2023. The rate has declined consistently since hitting a record high of 7.62% on Nov. 2, 2023.

The average US 15-year fixed-conforming mortgage rate stood at 6.37% as of Dec. 29, 2023, down from 6.82% posted as of Nov. 29, 2023.

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Existing home sales rises sequentially after 5 months of decline

Existing home sales grew in November 2023 after five consecutive months of declines, according to data from the National Association of Realtors.

Existing home sales rose 0.8% from October 2023 to a seasonally adjusted annual rate of 3.82 million units in November. Sales declined 7.3% from a year earlier.

While all US regions posted yearly declines in existing home sales, two of them grew sales on a month-over-month basis. At 4.7%, the South recorded the highest monthly increase in existing home sales.

The Northeast continued with the highest year-over-year decrease in existing home sales, at 13.0%.

"The latest weakness in existing home sales still reflects the buyer bidding process in most of October when mortgage rates were at a two-decade high before the actual closings in November," Lawrence Yun, chief economist at the National Association of Realtors, said in a Dec. 20, 2023 news release. "A marked turn can be expected as mortgage rates have plunged in recent weeks."

New home sales declined 12.2% month over month in November 2023 to a seasonally adjusted annual rate of 590,000 units, according to data from the US Census Bureau and the Department of Housing and Urban Development.

Total new home sales were 1.4% above the November 2022 estimate of 582,000 units.

The South posted the highest sequential decline in new home sales, at 20.9%. It was the only US region to post a year-over-year decline in new home sales.

At 52.2%, the Midwest logged the highest annual increase in new home sales.

Top mortgage lender

Total residential mortgages originated from the start of the year through September 2023 stood at $1.420 trillion, down 44.4% year over year, according to S&P Global Market Intelligence data.

Pontiac, Mich.-based UWM Holdings Corp. remained the top US residential mortgage lender with $56.89 billion in mortgages through September 2023.