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Tag Archives: Case-Shiller

HOME PRICE GAINS SLOW IN JULY

Case-Shiller 10-City Index down to 4.2% from 4.3% in June; 20-City down to 5% gain from 5.1%.

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.1% annual gain in July, up from 5.0% last month. The 10-City Composite posted a 4.2% annual increase, down from 4.3% the previous month. The 20-City Composite reported a year-over-year gain of 5.0%, down from 5.1% in June.

Portland, Seattle, and Denver reported the highest year-over-year gains among the 20 cities over each of the last six months. In July, Portland led the way with a 12.4% year-over-year price increase, followed by Seattle at 11.2%, and Denver with a 9.4% increase. Nine cities reported greater price increases in the year ending July 2016 versus the year ending June 2016.

The chart below depicts the annual returns of the U.S. National, the 10 -City Composite, and the 20- City Composite Home Price Indices. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, recorded a 5.1% annual gain in July 2016. The 10- City and 20-City Composites reported year-over-year increases of 4.2% and 5.0%.

Before seasonal adjustment, the National Index posted a month-over-month gain of 0.7% in July. The 10-City Composite recorded a 0.5% month-over-month increase while the 20-City Composite posted a 0.6% increase in July. After seasonal adjustment, the National Index recorded a 0.4% month-over- month increase, the 10-City Composite posted a 0.1% decrease, and the 20-City Composite remains unchanged. After seasonal adjustment, 12 cities saw prices rise, two cities were unchanged, and six cities experienced negative monthly prices changes.

“Both the housing sector and the economy continue to expand with home prices continuing to rise at about a 5% annual rate,” says David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “The statement issued last week by the Fed after its policy meeting confirms the central bank’s view that the economy will see further gains. Most analysts now expect the Fed to raise interest rates in December. After such Fed action, mortgage rates would still be at historically low levels and would not be a major negative for house prices,

“The S&P CoreLogic Case-Shiller National Index is within 0.6% of the record high set in July 2006. Seven of the 20 cities have already set new record highs. The 10-year, 20-year, and National indices have been rising at about 5% per year over the last 24 months. Eight of the cities are seeing prices up 6% or more in the last year. Given that the overall inflation is a bit below 2%, the pace is probably not sustainable over the long term. The run-up to the financial crisis was marked with both rising home prices and rapid growth in mortgage debt. Currently, outstanding mortgage debt on one-to-four family homes is 12.6% below the peak seen in the first quarter of 2008 and up less than 2% in the last four quarters. There is no reason to fear that another massive collapse is around the corner.”

Continue reading HOME PRICE GAINS SLOW IN JULY

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Home Prices Still Increasing Despite Fall In New Homes Sales

The report last week of a 13% fall in the number of new homes sold in September (compared to the previous September) was another bit of bad news behind the 10% fall in the S&P 500 so far in October. Homebuilder stocks are down nearly 40% from last January.

Looking at the graph below of Federal Reserve Economic Data (FRED), you can see new home sales have a strong tendency to fall a year or two before recessions begin, which helps explain why so many people are interested in following new home sales.

 

New One Family Home SalesSOURCE OF DATA: U.S. BUREAU OF THE CENSUS AND U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, RETRIEVED FROM FEDERAL RESERVE BANK OF ST. LOUIS. ANNOTATIONS BY JOHN WAKE.

The number of new homes sold began to fall a year or two before six out of the last seven recessions. (Home sales did not fall before the 2001 recession.) Looking at the graph again, you can see that new home sales did fall a few times without being followed by recessions—once in the 1960s, once in the 1980s and twice in the 1990s.

Case-Shiller Home Price Index

Now let’s switch from the new home market to the much larger existing home market and existing home price trends.

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One of the most closely followed statistics on the strength of the existing home market is the Case-Shiller Home Price Index, which released numbers today for August. The Case-Shiller numbers are not the most current, running about two months behind. But despite being slow, their “repeat sale” index is considered by many to be a better measure of home prices than median or average home prices. Average and median home prices, for example, are affected by the composition of the homes sold. If more luxury homes sell because the stock market is hot, that would increase the median and average home prices in a city even if home prices haven’t actually changed at all.

The latest Case-Shiller numbers show that home prices were still increasing in all 20 cities covered by the index and in the U.S. as a whole, but price increases were getting smaller.

Hot: Las Vegas home prices (up 13.9% in August compared to the previous August), San Francisco (up 10.6%) and Seattle (9.6%) had the highest annual home price appreciation in the 20 cities covered by Case-Shiller.

Cold: New York (up 2.8%) tied Washington D.C. (up 2.8%) for the least home price appreciation in the 20 cities. New York knocked Chicago (up 2.9%) out of the second worst spot.

Top and Bottom Two Case-Shiller Cities For Home Price AppreciationSOURCE OF DATA: S&P DOW JONES INDICES AND CORELOGIC. GRAPHIC BY JOHN WAKE.

Home Price Momentum

Las Vegas and San Francisco had by far the largest increases in home price momentum comparing their price increases the last 12 month to the previous 12 months.

Seattle’s price momentum slowed the most, down 3.6%, but Seattle still had a very high 9.6% appreciation rate over the last 12 months. Seattle led the country in home price appreciation from July 2016 through May 2018.

San Diego and Dallas were losing some upward momentum on prices but their home prices were still increasing at over 4% a year.

Overall, the U.S. home price momentum is essentially flat. U.S. home prices increased 5.8% in the last 12 months and 5.9% the previous 12 months. Half the 20 cities covered by Case-Shiller saw increasing price momentum and half saw decreasing home price momentum.

Case-Shiller Home Price Momentum For 20 CitiesSOURCE OF DATA: S&P DOW JONES INDICES AND CORELOGIC

The Case-Shiller existing home price index doesn’t show any red flags (yet) but, on the other hand, they say price is the last thing to change.

For more, here’s my discussion from last month on price deceleration and plateauing.

Continue reading Home Prices Still Increasing Despite Fall In New Homes Sales

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