Discover more from CalculatedRisk Newsletter
Case-Shiller: National House Price Index "Continued to Decline" to 10.6% year-over-year increase in September
FHFA: Third quarter "House prices were up 0.1 percent compared to the second quarter of 2022."
Both the Case-Shiller House Price Index (HPI) and the Federal Housing Finance Agency (FHFA) HPI for September 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 “September” is a 3-month average of July, August and September closing prices. July closing prices include some contracts signed in May, so there is a significant lag to this data.
The MoM decrease in Case-Shiller was at -0.76% seasonally adjusted. This was the third consecutive MoM decrease, and slightly less than the decrease last month. This suggests prices fell sharply for September 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 (-2.2%), Phoenix (-2.1%) and Las Vegas (-2.1%). San Francisco has fallen 10.3% from the peak in May 2022.
FHFA House Price Index
U.S. house prices rose 12.4 percent from the third quarter of 2021 to the third quarter of 2022 according to the Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices were up 0.1 percent compared to the second quarter of 2022. FHFA’s seasonally adjusted monthly index for September was up 0.1 percent from August.
“House prices were flat for the third quarter but continued to remain above levels from a year ago.” said William Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics. “The rate of U.S. house price growth has substantially decelerated. This deceleration is widespread with about one-third of all states and metropolitan statistical areas registering annual growth below 10 percent.”
The monthly index increased 0.1% in September. Here is a graph from the FHFA report showing the annual change by region for September 2022 compared to September 2021. Prices have increased YoY everywhere. Note that the Year-over-year increase is smaller this year, compared to the YoY increase in September 2021 in all of the nine regions.
Case-Shiller House Prices
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 10.6% annual gain in September, down from 12.9% in the previous month. The 10-City Composite annual increase came in at 9.7%, down from 12.1% in the previous month. The 20- City Composite posted a 10.4% year-over-year gain, down from 13.1% in the previous month.
Miami, Tampa, and Charlotte reported the highest year-over-year gains among the 20 cities in September. Miami led the way with a 24.6% year-over-year price increase, followed by Tampa in second with a 23.8% increase, and Charlotte in third with a 17.8% increase. All 20 cities reported lower price increases in the year ending September 2022 versus the year ending August 2022.
Before seasonal adjustment, the U.S. National Index posted a -1.0% month-over-month decrease in September, while the 10-City and 20-City Composites posted decreases of -1.4% and -1.5%, respectively.
After seasonal adjustment, the U.S. National Index posted a month-over-month decrease of -0.8%, and the 10-City and 20-City Composites both posted decreases of -1.2%.
In September, all 20 cities reported declines before and after seasonal adjustments.
“As has been the case for the past several months, our September 2022 report reflects short-term declines and medium-term deceleration in housing prices across the U.S.,” says Craig J. Lazzara, Managing Director at S&P DJI. “For example, the National Composite Index fell -1.0% in September, and now stands 10.6% above its year-ago level. We see comparable patterns in our 10- and 20-City Composites, which declined -1.4% and -1.5%, respectively, bringing their year-over-year gains down to 9.7% and 10.4%. For all three composites, year-over-year gains, while still well above their historical medians, peaked roughly six months ago and have decelerated since then.
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 1.2% in September (SA). The Composite 20 index is down 1.2% (SA) in September. The National index is 62% above the bubble peak (SA), and down 0.8% (SA) in September. The National index is down 2.2% from the recent peak in June 2022.
The Composite 10 SA is up 9.7% year-over-year. The Composite 20 SA is up 10.4% year-over-year. The National index SA is up 10.6% 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 September 2022). Note that the months-of-supply is not seasonally adjusted.
The last five months are in black showing a possible shift in the relationship, and prices are now falling with somewhat low levels of inventory!
In September, the months-of-supply was at 3.2 months, and the Case-Shiller National Index (SA) decreased -0.76% month-over-month. The last three 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 October existing home sales report, the NAR reported months-of-supply was increased to 3.3 months.
The year-over-year price increase was below expectations.
Here are the 30-year mortgage rates according to the Freddie Mac PMMS:
The September Case-Shiller report is mostly for contracts signed in the May through August period when 30-year mortgage rates were in the low-to-mid 5% range. The October report will mostly be for contracts signed in the June through September period - when rates were mostly in the low-to-mid 5% range (except September).
The impact from higher rates in September and October will not show up significantly for a few more months.
Note: I’ll have more on real prices, price-to-rent and affordability on tomorrow.
CalculatedRisk Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.