S&P CoreLogic Case-Shiller: Home Prices Rose at Slower Pace in November

Declining Existing Home Sales, Affordability the Major Factors in Slowing Home Price Gains

The S&P CoreLogic Case-Shiller Home Price Index (HPI) covering all nine U.S. census divisions posted a 5.2% annual gain in November. That’s down from 5.3% in the previous month.

The 10-City Composite came in at an annual gain of 4.3%, down from 4.7% in the previous month. The 20-City Composite posted a 4.7% year-over-year gain, down from 5.0% in the previous month and slightly missing the 4.9% consensus forecast.

“Home prices are still rising, but more slowly than in recent months,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The pace of price increases are being dampened by declining sales of existing homes and weaker affordability.”

Buyers pulled back before Fed policy changed course in December, and mortgage rates eased, down to 4.45% from 4.95%.

“Sales peaked in November 2017 and drifted down through 2018,” Mr. Blitzer added. “Affordability reflects higher prices and increased mortgage rates through much of last year.”

Las Vegas, Phoenix and Seattle reported the highest year-over-year gains among the 20 cities. Las Vegas led the way with a 12.0% year-over-year price increase, followed by Phoenix at 8.1% and Seattle at 6.3%.

“Housing market conditions are mixed while analysts’ comments express concerns that housing is weakening and could affect the broader economy,” Mr. Blitzer continued. “Current low inventories of homes for sale – about a four-month supply – are supporting home prices.”

Before seasonal adjustment, the National Index posted a month-over-month gain of 0.1% in November. The 10-City and 20-City Composites both reported a 0.1% decrease for the month. After seasonal adjustment, the National Index recorded a 0.4% month-over-month increase in November.

The 10-City Composite and the 20-City Composite both posted 0.3% month-over-month increases. In November, eight of 20 cities reported increases before seasonal adjustment, while 15 of 20 cities reported increases after seasonal adjustment.

“New home construction trends, like sales of existing homes, peaked in late 2017 and are flat to down since then,” Mr. Blitzer noted. “Stable 2% inflation, continued employment growth, and rising wages are all favorable.”

“Measures of consumer debt and debt service do not suggest any immediate problems.”