Case-Shiller: National House Price Index "Continued to Decline" to 7.7% year-over-year increase in November

FHFA: "House prices fell 0.1 percent nationwide in November compared to October"

Both the Case-Shiller House Price Index (HPI) and the Federal Housing Finance Agency (FHFA) HPI for November 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 “November” is a 3-month average of September, October and November closing prices. September closing prices include some contracts signed in July, so there is a significant lag to this data.

The MoM decrease in the Case-Shiller National Index was at -0.26% seasonally adjusted. This was the fifth consecutive MoM decrease, and a slightly larger decrease than in October.

On a seasonally adjusted basis, prices declined in 19 of the 20 Case-Shiller cities on a month-to-month basis (Detroit increased 0.1%). The largest monthly declines seasonally adjusted were in San Francisco (-1.4%), Phoenix (-1.4%) and Las Vegas (-1.2%). San Francisco has fallen 11.9% from the peak in May 2022 and is the first Case-Shiller city with a year-over-year decline (-1.6% year-over-year).

FHFA House Price Index

On the FHFA index: FHFA House Price Index Down 0.1 Percent in November; Up 8.2 Percent from Last Year

House prices fell 0.1 percent nationwide in November compared to October, according to the latest Federal Housing Finance Agency (FHFA) House Price Index (HPI®). House prices rose 8.2 percent from November 2021 to November 2022. The previously reported 0.0 percent price decline in October 2022 remained unchanged. …

“U.S. house prices were largely unchanged in the last four months and remained near the peak levels reached over the summer of 2022,” said Nataliya Polkovnichenko, Ph.D., Supervisory Economist, in FHFA’s Division of Research and Statistics. “While higher mortgage rates have suppressed demand, low inventories of homes for sale have helped maintain relatively flat house prices.” 
emphasis added

The monthly index declined 0.1% in November. Here is a graph from the FHFA report showing the annual change by region for November 2022 compared to November 2021. Prices have increased YoY everywhere. Note that the Year-over-year increase is smaller this year, compared to the YoY increase in November 2021 in all of the nine regions - especially in the Pacific and Mountain regions.

Case-Shiller House Prices

From S&P: S&P Corelogic Case-Shiller Index Continued to Decline in November

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a [7.7%] annual gain in November, down from [9.3%] in the previous month. The 10- City Composite annual increase came in at [6.3%], down from [8.0%] in the previous month. The 20-City Composite posted a [6.8%] year-over-year gain, down from [8.7%] in the previous month.

[Case-Shiller had an error in their text - corrected in brackets]

Miami, Tampa, and Atlanta reported the highest year-over-year gains among the 20 cities in November. Miami led the way with a 18.4% year-over-year price increase, followed by Tampa in second with a 16.9% increase, and Atlanta in third with a 12.7% increase. All 20 cities reported lower price increases in the year ending November 2022 versus the year ending October 2022.
...
Before seasonal adjustment, the U.S. National Index posted a -0.6% month-over-month decrease in November, while the 10-City and 20-City Composites posted decreases of -0.7% and -0.8%, respectively.

After seasonal adjustment, the U.S. National Index posted a month-over-month decrease of -0.3%, and the 10-City and 20-City Composites both posted decreases of -0.5%.

In November, all 20 cities reported declines before seasonal adjustments. After seasonal adjustments, 19 cities reported declines, with only Detroit increasing 0.1%.

“November 2022 marked the fifth consecutive month of declining home prices in the U.S.,” says Craig J. Lazzara, Managing Director at S&P DJI. “For example, the National Composite Index fell -0.6% for the month, reflecting a -3.6% decline since the market peaked in June 2022. We saw comparable patterns in our 10- and 20-City Composites, both of which stand more than -5.0% below their June peaks. These declines, of course, came after very strong price increases in late 2021 and the first half of 2022. Despite its recent weakness, on a year-over-year basis the National Composite gained 7.7%, which is in the 74th percentile of historical performance levels.

“All 20 cities in our November report showed price declines on a month-over-month basis, with a median decline of -0.8%. Moreover, for all 20 cities, year-over-year gains in November were lower than those of October, with a median year-over-year increase of 6.4%. Interestingly, home prices in San Francisco were down by -1.6% year-over-year, the first negative result for any city since San Francisco’s -0.4% decline in October 2019. This is the worst year-over-year result for San Francisco in more than 10 years (since a -3.0% result in March 2012). West coast weakness was not limited to California, as San Francisco was followed by Seattle (+1.5%) and Portland (+3.9%) at the bottom of the league table.
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 0.5% in November (SA) and down 4.1% from the recent peak in June 2022. The Composite 20 index is down 0.5% (SA) in November and down 4.1% from the recent peak in June 2022. The National index is down 0.3% (SA) in November and is down 2.5% from the peak in June 2022.

The Composite 10 SA is up 6.3% year-over-year. The Composite 20 SA is up 6.8% year-over-year. The National index SA is up 7.7% year-over-year.

House Prices and Inventory

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

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

In November, the months-of-supply was at 3.3 months, and the Case-Shiller National Index (SA) decreased -0.26% month-over-month.  The last five 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 December existing home sales report, the NAR reported months-of-supply declined to 2.9 months.

The year-over-year Case-Shiller house price increase was close to expectations.

Here are the 30-year mortgage rates according to the Freddie Mac PMMS:

The November report was mostly for contracts signed in the July through October period - and was likely impacted slightly by the surge in rates in October.

The impact from higher rates in October and November will really show up in the Case-Shiller index over the next several months.

Comparing to Median House Prices

Here is a comparison of year-over-year change in median house prices from the NAR and the year-over-year change in the Case-Shiller index. Median prices are distorted by the mix and repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices. However, in general, the Case-Shiller index follows the median price.

It is likely the median price will be down year-over-year in a few months - and Case-Shiller will follow.

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