The S&P CoreLogic Case-Shiller home price index logged an annual gain of 5.5% in December, continuing a streak of increases fueled by limited supply.

December’s gain in the national index was up from 5.0% in the prior month. Prices in urban areas continue to see larger increases, according to the index. The 10-city composite sub-index grew by 7.0% from December 2022, while the 20-city composite posted a year-over-year rise of 6.1%, up from increases of 6.3% and 5.4%, respectively.

“U.S. home prices faced significant headwinds in the fourth quarter of 2023,” said Brian D. Luke, head of commodities, real & digital Assets at S&P Dow Jones Indices. “However, on a seasonally adjusted basis, the S&P Case-Shiller Home Price Indices continued its streak of seven consecutive record highs in 2023. Ten of 20 markets beat prior records, with San Diego registering an 8.9% gain and Las Vegas the fastest rising market in December, after accounting for seasonal impacts.”

December marked the first time in 2023 that all 20 markets tracked by the indices posted year-over-year price increases. After 11 months of price declines, Portland, Oregon, finally registered an annual gain, showing a 0.3% increase from December 2022. San Diego, as Luke noted, was the biggest annual riser of December, followed by Los Angeles and Detroit, which both saw a yearly price increase of 8.3%.

With the whole of 2023 now in the books, Luke observed that price growth for the year surpassed average annual growth over the past 35 years.

“With trend growth at the national level of 4.7%, a 5.5% return demonstrates solid, steady growth,” he said. “While we are not experiencing the double-digit gains seen in the previous two years, above-trend growth should be well-received considering the rising costs of financing home mortgages.

“We previously suggested that the surge in home prices during the COVID pandemic could have accelerated home ownership temporarily,” Luke added. “The past two years reflect consistent growth slightly above trend, suggesting a more secular shift in homeownership post-pandemic. In the short term, meanwhile, we should be able to measure the impact of higher mortgage rates on home prices. Increased financing costs appeared to precipitate home price declines in the fourth quarter, as 15 markets saw lower values compared to September.”