Case-Shiller National Index up 18.8% Year-over-year in December

FHFA: "House prices continued to climb but not as rapidly during the final quarter of 2021 as in earlier quarters"

Both the Case-Shiller House Price Index (HPI) and the Federal Housing Finance Agency (FHFA) HPI for December 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 1.31%; lower than the increases early 2021, but higher than the increases in the previous 3 months. Still, the peak MoM growth is behind us, price growth did accelerate a little in December.

FHFA House Price Index

On the FHFA index: U.S. House Prices Rise 17.5 Percent over the Last Year; Up 3.3 Percent from the Third Quarter

U.S. house prices rose 17.5 percent from the fourth quarter of 2020 to the fourth quarter of 2021 according to the Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices were up 3.3 percent compared to the third quarter of 2021. FHFA’s seasonally adjusted monthly index for December was up 1.2 percent from November.

“House prices continued to climb but not as rapidly during the final quarter of 2021 as in earlier quarters,” said William Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics. “Housing trends over the past year have created challenges. The quick house price gains may be counterbalanced as mortgage rates increase. However, more expensive housing has elevated affordability to become a broader concern as available supply remains limited.

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This is the monthly and quarterly indexes. Here is a graph from the FHFA report showing the annual change by region for December 2021 compared to December 2020. Prices have increased sharply everywhere, but especially in the Mountain, South Atlantic, East South Central and Pacific regions.

Case-Shiller House Prices

From S&P: S&P Corelogic Case-Shiller Index Reports 18.8% Annual Home Price Gain for Calendar 2021

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 December, remaining the same from the previous month. The 10-City Composite annual increase came in at 17.0%, up from 16.9% in the previous month. The 20-City Composite posted an 18.6% year-over-year gain, up from 18.3% in the previous month. …

“We have noted that for the past several months, home prices have been rising at a very high, but decelerating rate. The deceleration paused in December, as year-over-year changes in all three composite indices were slightly ahead of their November levels. December’s 18.8% gain for the National Composite is the fifth-highest reading in history. [says Craig J. Lazzara, Managing Director at S&P DJI].
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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 1.4% in December (SA). The Composite 20 index is up 1.5% (SA) in December. The National index is 52% above the bubble peak (SA), and up 1.3% (SA) in December.  The National index is up 105% from the post-bubble low set in February 2012 (SA).

The Composite 10 SA is up 17.0% year-over-year. The Composite 20 SA is up 18.6% 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 December 2021).

Note that the months-of-supply is not seasonally adjusted.

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 December, the months-of-supply was at 1.7 months, and the Case-Shiller National Index (SA) increased 1.31% month-over-month.  The black arrow points to the December 2021 dot. In the January existing home sales report, the NAR reported months-of-supply decreased to a record low 1.6 months in January.

My sense is the Case-Shiller National annual growth rate of 19.98% 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!

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

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