Case-Shiller National Index up 19.7% Year-over-year in May

FHFA: "House prices continued to rise in May, but at a slower pace”

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

The MoM increase in Case-Shiller was at 1.04%. This was the smallest MoM increase since July 2020, and since this includes closings in March and April, this suggests price growth has slowed sharply.

FHFA House Price Index

On the FHFA index: FHFA House Price Index Up 1.4 Percent in May; Up 18.3 Percent from Last Year

House prices rose nationwide in May, up 1.4 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index (FHFA HPI®).  House prices rose 18.3 percent from May 2021 to May 2022.  The previously reported 1.6 percent price change for April 2022 was revised downward to 1.5 percent. …

“House prices continued to rise in May, but at a slower pace” said Will Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics.  “Since peaking in February, price appreciation has moderated slightly.  Price growth continues to remain above historical levels, supported by the low inventory of properties for sale.”
emphasis added

This is the monthly index.

Case-Shiller House Prices

From S&P: S&P Corelogic Case-Shiller Index Reports Annual Home Price Gain Of 19.7% In May

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 19.7% annual gain in May, down from 20.6% in the previous month. The 10-City Composite annual increase came in at 19.0%, down from 19.6% in the previous month. The 20-City Composite posted a 20.5% year-over-year gain, down from 21.2% in the previous month.
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Before seasonal adjustment, the U.S. National Index posted a 1.5% month-over-month increase in May, while the 10-City and 20-City Composites posted increases of 1.4% and 1.5%, respectively.

After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 1.0%, and the 10-City and 20-City Composites both posted increases of 1.3%.

In May, all 20 cities reported increases before and after seasonal adjustments.

“Housing data for May 2022 continued strong, as price gains decelerated slightly from very high levels,” says Craig J. Lazzara, Managing Director at S&P DJI. “The National Composite Index rose by 19.7% for the 12 months ended May, down from April’s 20.6% year-over-year gain. We see a similar pattern in the 10-City Composite (up 19.0% in May vs. 19.6% in April) and in the 20-City Composite (+20.5% vs. +21.2%). Despite this deceleration, growth rates are still extremely robust, with all three composites at or above the 98th percentile historically
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 up 1.3% in May (SA). The Composite 20 index is up 1.3% (SA) in May. The National index is 65% above the bubble peak (SA), and up 1.0% (SA) in May.  The National index is up 123% from the post-bubble low set in February 2012 (SA).

The Composite 10 SA is up 19.0% year-over-year.  The Composite 20 SA is up 20.5% year-over-year. The National index SA is up 19.7% 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 May 2022).

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 low (like now), prices rise quickly.

In May, the months-of-supply was at 2.6 months, and the Case-Shiller National Index (SA) increased 1.04% month-over-month.  The black arrow points to the May 2022 dot. In the June existing home sales report, the NAR reported months-of-supply increased to 3.0 months.

Since inventory is now increasing quickly (but still low), we should expect price increases to slow. The normal level of inventory is probably in the 4 to 6 months range, and we will have to see a significant increase in inventory to sharply slow price increases, and that is why I’m focused on inventory!

This was slightly below expectations. There is a significant lag to this data, see: When will House Price Growth Slow? Since Case-Shiller is a 3-month average, and this report was for May (includes March and April closings), this included price increases when mortgage rates were significantly lower than today. This report includes some homes with contracts signed in January (that closed in March)!

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