Case-Shiller: National House Price Index "Continued to Decelerate" to 13.0% year-over-year increase in August

FHFA: "House prices fell nationwide in August, down 0.7 percent from the previous month"

Both the Case-Shiller House Price Index (HPI) and the Federal Housing Finance Agency (FHFA) HPI for August were released today. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).

The Case-Shiller Home Price Indices for “August” is a 3-month average of June, July and August closing prices. June closing prices include some contracts signed in April, so there is a significant lag to this data.

The MoM decrease in Case-Shiller was at -0.86% seasonally adjusted. This was the second consecutive MoM decrease, and the largest MoM since February 2010. Since this includes closings in June and July, this suggests prices fell sharply for August closings.

On a seasonally adjusted basis, prices declined in all of the Case-Shiller cities on a month-to-month basis. The largest monthly declines seasonally adjusted were in San Francisco (-3.7%), Seattle (-2.9%), and San Diego (-2.5%). San Francisco has fallen 8.2% from the peak in May 2022.

FHFA House Price Index

On the FHFA index: FHFA House Price Index Down 0.7 Percent in August; Up 11.9 Percent from Last Year

House prices fell nationwide in August, down 0.7 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices rose 11.9 percent from August 2021 to August 2022. The previously reported 0.6 percent price decline in July 2022 remained unchanged. …

“U.S. house prices declined in August at a similar pace to the previous month. This is the first time since March 2011 that the index has seen two consecutive months of decline.” said Will Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics. “The recent monthly decline solidifies the deceleration of 12-month house price growth that began earlier this year. Higher mortgage rates continued to put pressure on demand, notably weakening house price growth.” 
emphasis added

The monthly index decreased 0.7% in August. Here is a graph from the FHFA report showing the annual change by region for August 2022 compared to August 2021. Prices have increased YoY everywhere. Note that the Year-over-year increase is smaller this year, compared to the YoY increase in August 2021 in all of the nine regions.

Case-Shiller House Prices

From S&P: S&P Corelogic Case-Shiller Index Continued to Decelerate in August

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 13.0% annual gain in August, down from 15.6% in the previous month. The 10- City Composite annual increase came in at 12.1%, down from 14.9% in the previous month. The 20- City Composite posted a 13.1% year-over-year gain, down from 16.0% in the previous month.
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Before seasonal adjustment, the U.S. National Index posted a -1.1% month-over-month decrease in August, while the 10-City and 20-City Composites both posted decreases of -1.6%.

After seasonal adjustment, the U.S. National Index posted a month-over-month decrease of -0.9%, and the 10-City and 20-City Composites both posted decreases of -1.3%.

In August, all 20 cities reported declines before and after seasonal adjustments.

“The forceful deceleration in U.S. housing prices that we noted a month ago continued in our report for August 2022,” says Craig J. Lazzara, Managing Director at S&P DJI. “For example, the National Composite Index rose by 13.0% for the 12 months ended in August, down from its 15.6% year-over-year growth in July. The -2.6% difference between those two monthly rates of change is the largest deceleration in the history of the index (with July’s deceleration now ranking as the second largest). We see similar patterns in our 10-City Composite (up 12.1% in August vs. 14.9% in July) and our 20-City Composite (up 13.1% in August vs. 16.0% in July). Further, price gains decelerated in every one of our 20 cities. These data show clearly that the growth rate of housing prices peaked in the spring of 2022 and has been declining ever since.

“Month-over-month comparisons are consistent with these observations. All three composites declined in July, as did prices in every one of our 20 cities. On a month-over-month basis, the biggest declines occurred on the west coast, with San Francisco (-4.3%), Seattle (-3.9%), and San Diego (-2.8%) falling the most.
emphasis added

This graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index is down 1.3% in August (SA). The Composite 20 index is down 1.3% (SA) in August. The National index is 64% above the bubble peak (SA), and down 0.9% (SA) in August.  The National index is up 121% from the post-bubble low set in February 2012 (SA) and down 1.3% from the recent peak.

The Composite 10 SA is up 12.1% year-over-year.  The Composite 20 SA is up 13.1% year-over-year. The National index SA is up 13.0% year-over-year.

House Prices and Inventory

This graph below shows existing home months-of-supply (inverted, from the NAR) vs. the seasonally adjusted month-to-month price change in the Case-Shiller National Index (both since January 1999 through August 2022). Note that the months-of-supply is not seasonally adjusted.

The last four months are in black showing a possible shift in the relationship, and prices are now falling with somewhat low levels of inventory!

In August, the months-of-supply was at 3.2 months, and the Case-Shiller National Index (SA) decreased -0.86% month-over-month.  The last two months appear to be outliers with prices falling even though months-of-supply is still somewhat low. Historically prices haven’t declined until inventory reached 6 months of supply. NOTE that the NAR appears to include some pending sales in their inventory, and inventory is probably up more than the NAR is reporting.

In the August existing home sales report, the NAR reported months-of-supply was unchanged at 3.2 months.

The year-over-year price increase was below expectations.

Here are the 30-year mortgage rates according to the Freddie Mac PMMS: (MortgageNewsDaily for October):

The August Case-Shiller report is mostly for contracts signed in the April through July period when 30-year mortgage rates were in the low-to-mid 5% range. The September report will mostly be for contracts signed in the May through August period - when rates were also in the low-to-mid 5% range.

The impact from higher rates in September and October will not show up for several more months.

Note: I’ll have more on real prices, price-to-rent and affordability on Thursday.