Home Price Appreciation Continues Slowing Trend

The Standard & Poor’s CoreLogic Case-Shiller Indices reported yesterday the rate of home price appreciation slowed to just 0.1 percent month over month in November and by 5.2 percent year over year. The National Home Price NSA Index fell from 5.3 percent in October; the 10-City Composite annual increase slowed to 4.3 percent from 4.7 percent in November, while the 20-City Composite posted a 4.7 percent year-over-year gain, down from 5.0 percent in the previous month

Las Vegas, Phoenix and Seattle reported the highest year-over-year gains among the 20 cities. In November, Las Vegas led with a 12.0 percent increase, followed by Phoenix with an 8.1 percent increase and Seattle with a 6.3 percent increase. Seven of the 20 cities reported greater price increases in the year ending November 2018 versus the year ending

Month over month, the National Index posted a gain of 0.1 percent in November. The 10-City and 20-City Composites both reported a 0.1 percent decrease for the month. After seasonal adjustment, the National Index recorded a 0.4 percent month-over-month increase in November. The 10-City Composite and the 20-City Composite both posted 0.3 percent month-over-month increases. Eight of 20 cities reported increases before seasonal adjustment, while 15 of 20 cities reported increases after seasonal adjustment.

“Home prices are still rising, but more slowly than in recent months,” said David M. Blitzer, Managing Director and Chairman of the Index Committee with S&P Dow Jones Indices. “The pace of price increases are being dampened by declining sales of existing homes and weaker affordability. Sales peaked in November 2017 and drifted down through 2018. Affordability reflects higher prices and increased mortgage rates through much of last year. Following a shift in Fed policy in December, mortgage rates backed off to about 4.45% from 4.95%.

Blitzer said housing market conditions are mixed, while analysts’ comments express concerns that housing is weakening and could affect the broader economy. “Current low inventories of homes for sale–about a four-month supply–are supporting home prices,” he said. “New home construction trends, like sales of existing homes, peaked in late 2017 and are flat to down since then. Stable 2 percent inflation, continued employment growth, and rising wages are all favorable. Measures of consumer debt and debt service do not suggest any immediate problems.”