Case-Shiller: Home Price Appreciation Continues to Slow


U.S. home prices increased 0.3% in March – the smallest monthly increase in years – and were up 3.7% compared with March 2018, according to the S&P CoreLogic Case-Shiller home price index.

“Home price gains continue to slow,” says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a statement. “The patterns seen in the last year or more continue: year-over-year price gains in most cities are consistently shrinking. Double-digit annual gains have vanished.”

The report shows the home price appreciation has slowed considerably in the major metro markets. The report’s 10-city and 20-city composites each posted a 0.1% month-over-month increase, after adjustment.

“In this report, Seattle prices are up only 1.6 percent,” Blitzer says. “The 20-city composite dropped from 6.7 percent to 2.7 percent annual gains over the last year as well.”

Blitzer adds that “the shift to smaller price increases is broad-based and not limited to one or two cities where large price increases collapsed.”

“Other housing statistics tell a similar story,” he adds. “Existing single family home sales are flat. Since 2017, peak sales were in February 2018 at 5.1 million at annual rates; the weakest were 4.36 million in January 2019. The range was 650,000.”

Without seasonal adjustment U.S. home prices increased 0.6% in March compared with February. The 10-city and 20-city composites each saw an increase of 0.7% for the month on a non-adjusted basis.

Las Vegas, Phoenix and Tampa saw the highest year-over-year gains among the 20 cities. In March, Las Vegas led the way with an 8.2% year-over-year price increase, followed by Phoenix at 6.1% and Tampa at 5.3%.

“Given the broader economic picture, housing should be doing better,” Blitzer says. “Mortgage rates are at four percent for a 30-year fixed rate loan, unemployment is close to a 50-year low, low inflation and moderate increases in real incomes would be expected to support a strong housing market. Measures of household debt service do not reveal any problems and consumer sentiment surveys are upbeat.

“The difficulty facing housing may be too-high price increases,” he adds. “At the currently lower pace of home price increases, prices are rising almost twice as fast as inflation: in the last 12 months, the [index] is up 3.7 percent, double the 1.9 percent inflation rate. Measured in real, inflation-adjusted terms, home prices today are rising at a 1.8 percent annual rate. This compares to a 1.2 percent real annual price increases in housing since 1975.”

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