Case-Shiller: Home Price Growth Continued to Slow in February

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U.S. home prices increased 0.3% on an adjusted basis in February compared with January and were up 4.0% compared with February 2018, according to the S&P CoreLogic Case-Shiller home price index – however, the report shows that home price appreciation continued to slow.

The 10-city composite and 20-city composite – measuring home price growth in the 10 largest and 20 largest U.S. cities by population, respectively – each saw an increase of 0.2% compared with the previous month.

Year-over-year, the 10-city composite saw an increase of 2.6% compared with February 2018 while the 20-city composite posted a gain of 3.0%.

However, the increase for the 10-city composite was down from 3.1% in January and the increase for the 20-city composite was down from 3.5%.

Before seasonal adjustment, home prices increased of 0.2% nationwide in February. The 10-city and 20-city composites each saw a 0.2% increase for the month, on a non-adjusted basis.

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

In February, Las Vegas led the way with a 9.7% year-over-year price increase, followed by Phoenix at 6.7% and Tampa at 5.4%.

Only one of the 20 cities reported greater price increases in the year ended February versus the year ended January 2019.

In February, 14 of 20 cities reported increases before seasonal adjustment, while 17 of 20 cities reported increases after seasonal adjustment.

“The pace of increases for home prices continues to slow,” says David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a statement. “Homes began their climb in 2012 and accelerated until late 2013 when annual increases reached double digits. Subsequently, increases slowed until now when the national index is up four percent in the last 12 months.

“Sales of existing single family homes have recovered since 2010 and reached their peak one year ago in February 2018,” Blitzer says. “Home sales drifted down over the last year except for a one-month pop in February 2019.

“Sales of new homes, housing starts, and residential investment had similar weak trajectories over the last year,” he adds. “Mortgage rates are down one-half to three-quarters of a percentage point since late 2018.”

Blitzer points out that in February 2018, Seattle was the leading city in terms of home price growth, with a year-over-year increase of 12.7%. However, in February of this year, the leading city for home price growth was Las Vegas – but it had an increase of only 9.7%.

“Regional patterns are shifting,” Blitzer explains. “The three California cities of Los Angeles, San Francisco and San Diego have the three slowest price increases over the last year. Chicago, New York and Cleveland saw only slightly larger prices increases than California. Prices generally rose faster in inland cities than on either the coasts or the Great Lakes. Aside from Las Vegas, Phoenix, and Tampa, which saw the fastest gains, Atlanta, Denver, and Minneapolis all saw prices rise more than four percent – twice the rate of inflation.”

The CoreLogic Case-Shiller report shows that while we may not be in a buyer’s market quite yet, some states are showing signs of becoming one very soon. Change is on the horizon.

“Slowing U.S. home price growth has primarily been driven by affordability constraints in a few of our largest, most expensive housing markets,” says Ralph McLaughlin, deputy chief economist and executive of research and insights for CoreLogic, in a separate statement. “And while we’re not in a buyer’s market yet, several Pacific Coast markets are on the cusp of seeing the first annual declines in home prices since 2012.

“In places like San Diego, San Francisco and Los Angeles, the proverbial chickens will be coming home to roost this spring because they haven’t been able to find a decently affordable coop,” McLaughlin adds.

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