Sun Belt Cities Lead Annual Home Price Gains

Home prices continued to post modest gains in September, according to the Standard & Poor’s CoreLogic Case-Shiller Indices.

The National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.2% annual gain in September, up from 3.1% in August. The 10-City Composite annual increase came in unchanged at 1.5; the 20-City Composite posted a 2.1% year-over-year gain, up from 2.0% in August. 

Phoenix, Charlotte and Tampa reported the highest year-over-year gains among the 20 cities. In September, Phoenix led with a 6.0% year-over-year price increase, followed by Charlotte at 4.6% and Tampa at 4.5%. Ten of the 20 cities reported greater price increases in the year ending September from August.  

Before seasonal adjustment, the National Index posted a month-over-month increase of 0.1% in September. The 10-City Composite was unchanged and the 20-City Composite posted an 0.1% increase. After seasonal adjustment, the National Index posted an 0.4% month-over-month increase in September. The 10-City Composite posted an 0.2% increase, while the 20-City Composite posted an 0.4% increase. In September, 12 of 20 cities reported increases before seasonal adjustment while 17 of 20 cities reported increases after seasonal adjustment.

“September’s report for the U.S. housing market is reassuring,” said Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy with S&P Dow Jones Indices. “After a long period of decelerating price increases, it’s notable that in September both the national and 20-city composite indices rose at a higher rate than in August, while the 10-city index’s September rise matched its August performance. It is, of course, too soon to say whether this month marks an end to the deceleration or is merely a pause in the longer-term trend.”

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

“While stubbornly low mortgage rates have put the kabash on the great housing market cooldown, the boom and bust patterns of home price growth in West appear to be now solidly on the bust side,” said Ralph B. McLaughlin, deputy chief economist and executive of research and insights for CoreLogic. “Both San Francisco and Las Vegas–once emblems of the housing market gold rush–have turned into ghost towns, relatively speaking, over the past year. While not great news from new homeowners, first-time buyers looking to get their foot in the door of homeownership might have something new to be thankful for this holiday season.”

In a separate report, First American Financial Corp., Santa Ana, Calif, released its Real House Price Index, showing real house prices increased by 0.9 percent between August and September. Real house prices declined by 7.6 percent between September 2018 and September 2019.

The report said consumer house-buying power increased by 0.2 percent between August and September, and increased by 15.8 percent year over year. Real house prices are 18.8 percent less expensive than in January 2000; but while unadjusted house prices are now 8.1 percent above the housing boom peak in 2006, real, house-buying power-adjusted house prices remain 42.2 percent below their 2006 housing boom peak.

“Two of the three key drivers of the Real House Price Index, household income and mortgage rates, modestly swung in favor of increased affordability in September, yet affordability declined month over month,” said Mark Fleming, chief economist with First American. “The 30-year, fixed-rate mortgage fell by 0.01 percentage points and household income increased 0.03 percent compared with August 2019. When household income rises, consumer house-buying power increases. Declining mortgage rates have a similar impact on consumer house-buying power. However, nominal house price appreciation jumped 1.1 percent in September, outpacing the benefits of rising house-buying power on affordability.”

Other report highlights:

–No states saw a year-over-year increase in the RHPI. States with the greatest year-over-year decrease were New Mexico (-12.1 percent), California (-10.4 percent), Colorado (-9.6 percent), Wyoming (-9.4 percent) and Utah (-9.3 percent).

–Among metros, no markets saw a year-over-year increase in the RHPI. Markets with the greatest year-over-year decrease were San Jose, Calif. (-15.0 percent), San Francisco (-12.4 percent), Portland, Ore. (-11.3 percent), Los Angeles (-10.4 percent) and Denver (-10.3 percent).