S&P Reports Steady Home Price Appreciation

Standard & Poor’s, New York, said annual home price appreciation held steady at 6.4 percent in May, with month-over-month appreciation at 1.1 percent.

The S&P CoreLogic Case-Shiller Home Price Indices said the 10-City Composite annual increase came in at 6.1%, down from 6.4% in the previous month. The 20-City Composite posted a 6.5% year-over-year gain, down from 6.7% in the previous month.

The report said Seattle, Las Vegas and San Francisco continued to report the highest year-over-year gains among the 20 cities. In May, Seattle led the way with a 13.6% year-over-year price increase, followed by Las Vegas with a 12.6% increase and San Francisco with a 10.9% increase. Seven of the 20 cities reported greater price increases in the year ending May from a year ago.

Before seasonal adjustment, the National Index posted a month-over-month gain of 1.1% in May. The 10-City and 20-City Composites reported increases of 0.5% and 0.7%, respectively. After seasonal adjustment, the National Index recorded a 0.4% month-over-month increase in May. The 10-City and 20-City Composites posted 0.1% and 0.2% month-over-month increases, respectively. Nineteen of 20 cities reported increases in May before seasonal adjustment, while 16 of 20 cities reported increases after seasonal adjustment.

“Home prices continue to rack up gains two to three times greater than the inflation rate,” said David M. Blitzer, Managing Director & Chairman of the Index Committee with S&P Dow Jones Indices. “The year-over-year increases in the S&P CoreLogic Case-Shiller National Index have topped 5% every month since August 2016.”

Blitzer said unlike the boom-bust period surrounding the financial crisis, price gains have been consistent across the 20 cities tracked in the release; currently, the range of the largest to smallest price change is 10 percentage points compared to a 20 percentage point range since 2001, and a 25 percentage point range between 2006 and 2009.

“Not only are prices rising consistently, they are doing so across the country,” Blitzer said, noting declining existing and new home sales, flattening housing starts and declining affordability. “All these indicators suggest that the combination of rising home prices and rising mortgage rates are beginning to affect the housing market.”

Cheryl Young, Senior Economist with Trulia, San Francisco, said rising interest rates and improving housing inventories “did nothing” to stem price growth. “The bottom end of the market and first-time home buyers continues to suffer as the lack of affordability pushes available homes further and further out of reach,” she said.

The report said as of May, average home prices for the metros within the 10-City and 20-City Composites are back to their winter 2007 levels.