S&P Case-Schiller Index: Home Prices Flat in September from Month Prior

Home prices in 20 major metropolitan areas were unchanged in September from August levels on a non-seasonally adjusted basis, falling short of expectations for a 0.2 percent increase. However, not all of the data were discouraging.

Prices rose 4.9 percent year-over-year, beating out economists’ expectations for a 4.6 percent increase, according to the S&P Case-Shiller home prices index. Further, U.S. single-family home prices showed a stronger-than-expected rise in September on a year-over-year basis, but indicated a deceleration from the prior month, a closely watched survey said on Tuesday.

Economists polled by Reuters forecast a 4.6 percent increase.

On a seasonally adjusted monthly basis, prices in the 20 cities rose 0.3 percent for the month, while the Reuters poll of economists had forecast an increase of 0.1 percent. Non-seasonally adjusted prices, however, were unchanged in the 20 cities on a monthly basis, also falling short.

“The overall trend in home price increases continues to slow down,” David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement. “With the economy looking better than a year ago, the housing outlook for 2015 is stable to slightly better.”

However, other economists are concerned that the price increases are moving hand-in-hand with the increase level of risk in the market year-over-year. AEI’s National Mortgage Risk Index for home purchase loans climbed almost 1 percentage point above the October 2013 level. A total of 220,000 loans were added in October, bringing the total number of loans included in the index to 4.78 million.

The gauge, which is the first-ever measure of how mortgage loans originated month-by-month would perform under severely stressed conditions, found loans to FTHBs (first time homebuyers) in October had a risk rating of 14.46 percent. That is roughly 3 points higher than the composite rating, an elevation of risk largely due to the concentration and lack of diversity of FHA loans.

A broader measure of national housing market activity that S&P/Case-Shiller is now releasing on a monthly basis rose at a slower pace year over year, coming in at 4.8 percent. The seasonally adjusted 10-city gauge rose 0.3 percent in September versus a 0.2 percent drop in August, while the non-adjusted 10-city index was unchanged for the month compared to a 0.2 percent rise in August.