Case-Shiller: Given the Economy, "Housing Should be Doing Better.
Both the S&P Dow Jones Indices and home
price indicators from the Federal Housing Finance Agency (for March continue to
show slowing appreciation although there also continue to be significant
regional differences.
The S&P CoreLogic Case-Shiller U.S.
National Home Price NSA Index, covering all nine U.S census divisions, reported a 3.7 percent
annual gain in March, down from 3.9 percent in the previous month. Before
seasonal adjustment, the National Index posted a month-over-month increase of
0.6% in March, jumping from an 0.2 percent gain in February, but after seasonal
adjustment, there was no change from the 0.3 percent increase posted in February.
The annual increase in the 10-City
Composite was 2.3 percent compared to 2.5 percent in March while the 20-City
Composite increased 2.7 percent, down from a 3.0 percent rate of appreciation
the prior month. Both composites posted
identical month-over-month changes, 0.7 percent before seasonal adjustment and
0.1 percent afterward. Nineteen of 20
cities posted positive changes on an unadjusted basis and 14 of 20 cities after
adjustment.
Las Vegas again posted the largest annual
price appreciation at 8.2 percent. Phoenix followed at 6.1 percent. and Tampa was
third at 5.3 percent. Four of the 20
cities had larger increases in the year ending March 2019 than in the year
ending February 2019.
David M. Blitzer, Managing Director and
Chairman of the Index Committee at S&P Dow Jones Indices provided the
following analysis. "Home price gains
continue to slow. The patterns seen in
the last year or more continue: year-over-year price gains in most cities are
consistently shrinking. Double-digit annual gains have vanished. The largest
annual gain was 8.2 percent in Las Vegas; one year ago, Seattle had a 13
percent gain. In this report, Seattle prices are up only 1.6 percent. The
20-City Composite dropped from 6.7 percent to 2.7 percent annual gains over the
last year as well. The shift to smaller price increases is broad-based and not
limited to one or two cities where large price increases collapsed. Other
housing statistics tell a similar story. Existing single-family home sales are
flat. Since 2017, peak sales were in February 2018 at 5.1 million at annual
rates; the weakest were 4.36 million in January 2019. The range was 650,000.
"Given the broader economic picture,
housing should be doing better. Mortgage rates are at 4 percent for a 30-year
fixed rate loan, unemployment is close to a 50-year low, low inflation and
moderate increases in real incomes would be expected to support a strong
housing market. Measures of household debt service do not reveal any problems
and consumer sentiment surveys are upbeat. The difficulty facing housing may be
too-high price increases. At the currently lower pace of home price increases,
prices are rising almost twice as fast as inflation: in the last 12 months, the
S&P Corelogic Case-Shiller National Index is up 3.7 percent, double the 1.9
percent inflation rate. Measured in real, inflation-adjusted terms, home prices
today are rising at a 1.8 percent annual rate. This compares to a 1.2 percent
real annual price increases in housing since 1975."

The National Index is now up 11.7 percent
from its prior peak in 2007. The 10-City
and 20-City Composites have surpassed their pre-recession peaks by 0.6 percent
and 3.7 percent respectively.
FHFA's Housing Price Index (HPI) indicates
slightly higher gains annual gains than the Case-Shiller indices; a 12-month
increase of 5.1 percent. However, the
February to March change was identical to those reported for the City Composites
at 0.1 percent. FHFA also reported on
first quarter 2019 prices and they were up 1.1 percent.
Among the nine census regions the Mountain Division performed
best. Prices were up 7.2 percent
year-over-year with a 1.7 percent increase in Q1. The weakest annual appreciation was in the formerly
fast rising Pacific region which had only a 3.7 percent annual increase and no
change month-over-month.
Home prices were up in all 50 states and the District of
Columbia between the first quarters of 2018 and 2019. Idaho topped the list at 13.4 percent while
Nevada and Utah followed at 10.6 percent and 8.9 percent respectively. Also, in the top five were Tennessee and
Georgia. Gains were smallest in
Maryland, Delaware, and Louisiana, all failing to top 1.0 percent. Home prices moved higher in 95 of the 100
largest metropolitan areas.
"House prices have risen consistently over the last 31
quarters," said Dr. William Doerner, Supervisory Economist. "Although
price growth is still positive, the upward pace is softening across the
country, especially among states with the largest supplies of housing."
The HPI is calculated using home sales price information from
mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. The
index was benchmarked to 100 in January 1991.
The March 2019 reading was 273.4
The S&P CoreLogic Case-Shiller Home
Price Indices are constructed to accurately track the price path of typical
single-family home pairs for thousands of individual houses from the available
universe of arms-length sales data. The National U.S. Home Price Index tracks
the value of single-family housing within the United States. The indices have a
base value of 100 in January 2000; thus, for example, a current index value of
150 translates to a 50 percent appreciation rate since January 2000 for a
typical home located within the subject market.
As of March 2019,
the National Index was at 206.23, up from 205.04 in February. The 10- and
20-City Composites had readings of 227.57 and 214.09 respectively, compared to
226.20 and 212.70 the prior month. Los
Angeles has the highest index at 281.63 and Cleveland the lowest at 122.28.