Case-Shiller: Home Price Appreciation at Slowest Pace Since 2009

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Home price appreciation continued to slow in June, according to the S&P CoreLogic Case-Shiller home price index.

On an adjusted basis, U.S. home prices increased 0.2% in June compared with May and were up 3.3% compared with June 2018, according to the report.

The 10-city and the 20-city composites, which measure home price growth in the top 10 and top 20 largest U.S. cities, were flat compared with the previous month.

On an unadjusted basis, home prices increased 0.6% in June compared with May. 

The 10-city composite posted a 0.2% increase, on an unadjusted basis, while the 20-city composite reported a 0.3% increase for the month. 

Year-over-year, the 10-city composite saw home prices increase 1.8% while the 20-city composite saw prices increases 2.1%.

Phoenix, Las Vegas and Tampa reported the highest year-over-year gains among the 20 largest cities. 

In June, Phoenix led the way with a 5.8% year-over-year increase, followed by Las Vegas at 5.5% and Tampa at 4.7%.

“Home price gains continue to trend down, but may be leveling off to a sustainable level,” says Philip Murphy, managing director and global head of index governance at S&P Dow Jones Indices, in a statement. “The average [annual] gain declined to 3.0 percent in June, down from 3.1 percent the prior month.”

As Murphy points out, prices are depreciating fastest in a majority of the major markets.

“The southwest – Phoenix and Las Vegas – remains the regional leader in home price gains, followed by the southeast – Tampa and Charlotte,” he says. “With three of the bottom five cities – Seattle, San Francisco, and San Diego – much of the west coast is challenged to sustain [annual] gains.

“For the second month in a row, however, only Seattle experienced outright decline with [an annual] price change of -1.3 percent,” Murphy says. “The U.S. National Home Price NSA Index [annual] price change in June of 3.1 percent is exactly half of what it was in June 2018.

“While housing has clearly cooled off from 2018, home price gains in most cities remain positive in low single digits,” he adds. “Therefore, it is likely that current rates of change will generally be sustained barring an economic downturn.”

Ralph McLaughlin, deputy chief economist and executive of research and insights for CoreLogic, says although falling mortgage rates have thus far only spurred refinances and not purchases, “there will undoubtedly be a large boon to the marginal homebuyer.”

“Thus, we should expect the lengthy slowdown in home price growth to flatten or even tick upwards by the end of the year assuming the U.S. economy avoids any present-day threats of a recession,” McLaughlin says in a separate statement.

June marked the 15th consecutive month of slowing home-price growth.

So why aren’t falling mortgage rates leading to an increase in purchase volume?

As McLaughlin points out, “homebuyers base their decision on a much broader set of criteria than refinancers, which include life-cycle events such as marriage, raising children, divorce or retirement.”

“That said, if mortgage rates continue to fall, wages continue to grow and inventory continues to tick up, we can expect the U.S. home price growth to stabilize or even reverse course by the end of the year,” McLaughlin adds.

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