US home prices jump another 5% on tumbling mortgage rates and tight supply

• US home prices climbed 5.2% year-over-year in November, according to CoreLogic.
• Falling mortgage rates and a dwindling supply have helped prop up the market.
• “This continued strength remains remarkable amid the nation’s affordability crunch,” economist Selma Hepp said.

US home prices have continued to climb, according to CoreLogic data, with tumbling mortgage rates helping prop up the nation's supply-starved housing market.

The analytics firm said Tuesday that prices jumped 5.2% year-on-year nationwide in November, up from a 4.7% gain the previous month.

It expects them to rise another 2.5% over the next 12 months, despite expectations that slowing economic growth could chip away at Americans' spending power in 2024.

The US housing market stagnated last year – but there have been signs of a thaw in recent months, with mortgage rates falling away from 23-year highs.

The average 30-year fixed-rate mortgage has dropped from 7.9% in late October to 6.6% as of January 4, per data from Freddie Mac. Lower borrowing costs tend to boost demand, driving house prices higher.

Consistently low inventory levels have further fueled the run-up in prices, with the US short anywhere between 1.5 million and 5.5 million homes, according to estimates by the Biden Administration and the National Association of Realtors.

"This continued strength remains remarkable amid the nation's affordability crunch but speaks to the pent-up demand that is driving home prices higher," CoreLogic's chief economist Selma Hepp said. "Markets where the prolonged inventory shortage has been exacerbated by the lack of new homes for sale recorded notable price gains over the course of 2023."

Home prices rose the most in the US's northeastern region in November – with the Rhode Island, Connecticut, and New Jersey housing markets each experiencing double-digit year-over-year growth. Meanwhile, prices fell in Idaho, Utah, and Washington, D.C. over the same period.