Case-Shiller: National House Price Index "Continued to Decline" to 9.2% year-over-year increase in October
FHFA: "House prices were flat nationwide in October, experiencing a 0.0 percent change from the previous month"
Both the Case-Shiller House Price Index (HPI) and the Federal Housing Finance Agency (FHFA) HPI for October 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 “October” is a 3-month average of August, September and October closing prices. August closing prices include some contracts signed in June, 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 fourth consecutive MoM decrease, but smaller than the decrease over the previous three months.
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 Las Vegas (-1.3%), Phoenix (-1.2%) and Dallas, Miami and San Francisco (all at -0.9%). San Francisco has fallen 11.0% from the peak in May 2022.
FHFA House Price Index
On the FHFA index: FHFA House Price Index 0.0 Percent in October; Up 9.8 Percent from Last Year
House prices were flat nationwide in October, experiencing a 0.0 percent change from the previous month, according to the latest Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices rose 9.8 percent from October 2021 to October 2022. The previously reported 0.1 percent price increase in September 2022 remained unchanged.
“U.S. houe prices have seen two consecutive months of near-zero appreciation," said Nataliya Polkovnichenko, Ph.D., Supervisory Economist, in FHFA's Division of Research and Statistics. “Higher mortgage rates continued to put downward pressure on demand, weakening house price growth. The U.S. house price index growth decelerated as it posted the first 12-month growth rate below 10 percent after 24 consecutive months of double-digit appreciation rates."
The monthly index was unchanged in October. Here is a graph from the FHFA report showing the annual change by region for October 2022 compared to October 2021. Prices have increased YoY everywhere. Note that the Year-over-year increase is smaller this year, compared to the YoY increase in October 2021 in all of the nine regions - especially in the Pacific and Mountain 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 9.2% annual gain in October, down from 10.7% in the previous month. The 10-City Composite annual increase came in at 8.0%, down from 9.6% in the previous month. The 20-City Composite posted a 8.6% year-over-year gain, down from 10.4% in the previous month.
Miami, Tampa, and Charlotte reported the highest year-over-year gains among the 20 cities in October. Miami led the way with a 21% year-over-year price increase, followed by Tampa in second with a 20.5% increase, and Charlotte in third with a 15% increase. All 20 cities reported lower price increases in the year ending October 2022 versus the year ending September 2022.
Before seasonal adjustment, the U.S. National Index posted a -0.5% month-over-month decrease in October, 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 October, all 20 cities reported declines before and after seasonal adjustments.
“October 2022 marked the fourth 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 -0.5% for the month, reflecting a -3.0% decline since the market peaked in June 2022. We saw comparable patterns in our 10- and 20-City Composites, both of which stand -4.6% below their June peaks after October declines of -0.7% and -0.8%, respectively. 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 9.2%, which is in the top quintile of historical performance levels.
“Despite considerable regional differences, all 20 cities in our October report reflect these trends of short-term decline and medium-term deceleration. Prices declined in every city in October, with a median change of -0.9%. Year-over-year price gains in all 20 cities were lower in October than they had been in September; the median year-over-year increase across the 20 cities was 8.3%.
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 October (SA) and down 3.8% from the recent peak in June 2022. The Composite 20 index is down 0.5% (SA) in October and down 3.8% from the recent peak in June 2022. The National index is down 0.3% (SA) in October and is down 2.4% from the peak in June 2022.
The Composite 10 SA is up 8.0% year-over-year. The Composite 20 SA is up 9.6% year-over-year. The National index SA is up 9.2% 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 October 2022). Note that the months-of-supply is not seasonally adjusted.
The last six months are in black showing a possible shift in the relationship, and prices are now falling with somewhat low levels of inventory!
In October, the months-of-supply was at 3.2 months, and the Case-Shiller National Index (SA) decreased -0.26% month-over-month. The last four 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 November existing home sales report, the NAR reported months-of-supply was unchanged at 3.3 months.
The year-over-year price increase was close to expectations.
Here are the 30-year mortgage rates according to the Freddie Mac PMMS:
The October Case-Shiller report is mostly for contracts signed in the June through September period when 30-year mortgage rates were mostly in low-to-mid 5% range except in September when rates moved up to the low 6% range. The November report will mostly be for contracts signed in the July through October period - and will be impacted partially by the surge in rates in October.
The impact from higher rates in October and November will not show up significantly in the Case-Shiller index for a couple more months.
Note: I’ll have more on real prices, price-to-rent and affordability on Thursday.
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