The San Diego metropolitan area’s annual home price increased 6.5 percent in September, said a recent S&P Case-Shiller Indices report. It was the second-highest in the 20-city index, behind Detroit, and San Diego’s highest showing in just over two years.

Lack of homes for sale across the nation was cited by analysts as the biggest reason for climbing prices. In the San Diego metropolitan area — which includes all of San Diego County — there were 2,101 home sales, marking the lowest ever recorded for a September in records going back to 1988.

Prices were up 3.9 percent nationwide, despite rising mortgage rates. In the last week of September, the average interest rate for a 30-year, fixed-rate mortgage was 7.31 percent, said Freddie Mac. That was up from 6.7 percent at the same time last year.

“Even as rates began to rise quickly earlier this fall, buyers were able to put more money down — or buy in cash — which continued to put upward pressure on prices,” wrote Bright MLS chief economist Lisa Sturtevant.

She wrote that it is likely home prices will start coming down in the winter because of a typical seasonal slowdown, and a slight increase in listings.

The Case-Shiller Indices track repeat sales of identical single-family houses — and are seasonally adjusted — as they turn over through the years. The San Diego County median resale single-family home price was $930,000 in September.

Detroit was the fastest-appreciating market in September, up 6.7 percent in a year. However, the cost is significantly different than America’s Finest City. The median sale price in the Detroit metro area was $183,000 in September.

Other top markets in the index were New York, up 6.3 percent annually; Chicago, up 6 percent; and Boston, up 5.3 percent. At the bottom was Phoenix, down 1.2 percent in a year, and Las Vegas, down 1.9 percent.

Zillow senior economist Orphe Divounguy wrote that while the increases were notable, it was important to remember that mortgage rates were just starting to really increase around this time last year.

“While price growth remained somewhat flat in September,” he wrote, “annual price growth accelerated — mostly due to the lower base from a year ago, as prices were falling this time last year.”

Lack of home inventory — largely caused by homeowners not wanting to give up low mortgage rates — has been pushing up prices. But experts are unsure how long that will last. A telling sign is that the other half of the real estate market, rentals, are seeing a slowdown or drop in prices.

The University of Southern California’s real estate school said in its annual forecast this month that San Diego County will likely only see a 2 percent annual rent gain in the next two years. That is a huge change from the last few years, which saw a 13.8 percent annual price rise in 2022.

A big reason for the stabilized rental market, said the USC report, was a bigger increase in rental construction, as opposed to for-sale housing. Last year, San Diego County built 6,171 multifamily homes (mainly apartments), said the Construction Industry Research Board, compared to 3,471 single-family homes.

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Annual price growth by metropolitan area

S&P/Case-Shiller Home Price Index, September 2023

Detroit: 6.7 percent
San Diego: 6.5 percent
New York: 6.3 percent
Chicago: 6 percent
Boston: 5.3 percent
Los Angeles: 5.2 percent
Cleveland: 5 percent
Miami: 5 percent
Charlotte: 4.7 percent
Washington: 4.4 percent
Atlanta: 4.3 percent
Minneapolis: 2.4 percent
Tampa: 1.5 percent
Denver: 1 percent
Seattle: 0.9 percent
San Francisco: 0.5 percent
Dallas: 0.3 percent
Portland: -0.7 percent
Phoenix: -1.2 percent
Las Vegas: -1.9 percent
NATIONAL: 3.9 percent

Source: SDuniontribune by Phillip Molnar