US home prices continued to climb in October, setting a new record high and marking the ninth consecutive month of increases, according to data released on Tuesday. The soaring home prices, combined with rising mortgage rates, have made it the least affordable housing market in a generation.

Data from the S&P CoreLogic Case-Shiller US National Home Price Index shows that prices rose by 0.6% from the previous month, contributing to a 4.8% annual change compared to the previous year. This represents the strongest national growth rate since 2022.

The persistence of historically low inventory has played a significant role in driving up home prices. With limited options available, potential buyers who could bear higher mortgage rates or those paying in cash found themselves competing for the few homes on the market. Additionally, the fear of further interest rate hikes in the future motivated many buyers to make a purchase sooner rather than later, leading to higher prices.

Detroit emerged as the fastest-growing market for the second consecutive month, recording an 8.1% annual gain. San Diego followed closely behind with a 7.2% gain, trailed by New York with a 7.1% gain. Among the 20 cities assessed, eight hit all-time high price levels, including Miami, Atlanta, Chicago, Boston, Detroit, Charlotte, New York, and Cleveland.

The Midwest and Northeast regions have experienced the strongest growth in the housing market, while the Southwest and West have lagged behind for over a year, according to the data. Overall, home price appreciation has been observed in 19 out of 20 cities surveyed, indicating a consistent upward trend across the country.

The sharp increase in mortgage rates during the period under review impacted existing home sales, which fell to a new 13-year low in October. The higher rates reduced the purchasing power of many buyers, causing challenges for those looking to enter the market. Limited inventory and the anticipation of further rate increases contributed to the upward pressure on home prices.

Despite the recent surge in mortgage rates, they have since declined, providing some respite for potential homebuyers. The average rate for a 30-year, fixed-rate loan dropped to 6.67%, the lowest level since June. Analysts predict that this decrease in rates will likely drive strong demand for homes in early 2024, potentially leading to renewed pressure on prices, similar to trends observed in early 2023.

The housing market has shown remarkable resilience throughout 2023, with home price gains reaching 7% since the beginning of the year. These gains have exceeded the peak levels recorded in 2022, recovering all losses incurred in the latter half of that year. Looking ahead, experts anticipate that most markets will continue to reach new home price highs during the course of 2024.

In conclusion, US home prices reached a new record high in October, marking a sustained period of growth. The combination of rising prices and mortgage rates has posed challenges for buyers, resulting in a less affordable housing market. While recent declines in mortgage rates offer some relief, the housing market is expected to remain strong, with prices likely to continue climbing in the coming months.