Case-Shiller National Index up 18.8% Year-over-year in November
FHFA: "House price levels remained elevated in November, but the data indicate a pivot"
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 MoM increase in Case-Shiller was at 1.14%; still historically high, but lower than the increases in the 2nd half of 2020 and first half of 2021. House prices started increasing sharply in the Case-Shiller index in August 2020, so the last 16 months have all been historically very strong, but the peak MoM growth is behind us - and the year-over-price growth is starting to decelerate.
FHFA House Price Index
House prices rose nationwide in November, up 1.1 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices rose 17.5 percent from November 2020 to November 2021. The previously reported 1.1 percent price change for October 2021 remained unchanged. …
“House price levels remained elevated in November, but the data indicate a pivot,” said Will Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics. “The last four months reflect average gains of 1.0 percentage point, down from the larger prior changes during the spring and summer months. This new trend is a welcome shift but still twice the monthly average we have seen in the last 20 years, which echoes concerns about access and affordability in housing markets.”
This is the monthly index. Here is a graph from the FHFA report showing the annual change by region for November 2021 compared to November 2020. Prices have increased sharply everywhere, but especially in the Mountain, South Atlantic, East South Central and Pacific 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 an 18.8% annual gain in November, down from 19.0% in the previous month. The 10-City Composite annual increase came in at 16.8%, down from 17.2% in the previous month. The 20- City Composite posted an 18.3% year-over-year gain, down from 18.5% in the previous month. …
“For the past several months, home prices have been rising at a very high, but decelerating, rate. That trend continued in November 2021,” says Craig J. Lazzara, Managing Director at S&P DJI. “The National Composite Index rose 18.8% from year-ago levels, and the 10- and 20-City Composites gained 16.8% and 18.3%, respectively. In all three cases, November’s gains were less than October’s. Despite this deceleration, it’s important to remember that November’s 18.8% gain was the sixth-highest reading in the 34 years covered by our data (the top five were the months immediately preceding November).
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 up 1.1% in November (SA). The Composite 20 index is up 1.2% (SA) in November. The National index is 50% above the bubble peak (SA), and up 1.1% (SA) in November. The National index is up 102% from the post-bubble low set in February 2012 (SA).
The Composite 10 SA is up 16.8% year-over-year. The Composite 20 SA is up 18.3% year-over-year. The National index SA is up 18.8% 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 November 2021).
There is a clear relationship, and this is no surprise (but interesting to graph). If months-of-supply is high, prices decline. If months-of-supply is very low (like now), prices rise quickly.
In November, the months-of-supply was at 2.1 months, and the Case-Shiller National Index (SA) increased 1.14% month-over-month. The black arrow points to the November 2021 dot. In the December existing home sales report, the NAR reported months-of-supply decreased to a record low 1.8 months in December.
We are seeing the expected deceleration in house price growth, and this trend will probably continue for at least a few more months. My sense is the Case-Shiller National annual growth rate of 19.99% in August was probably the peak YoY growth rate, however, since the normal level of inventory is probably in the 4 to 6 months range - we’d have to see a significant increase in inventory to sharply slow price increases, and that is why I’m focused on inventory!
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