Case-Shiller National Index up 19.8% Year-over-year in February; New Record Monthly Increase

FHFA: "House prices rose to set a new historical record in February"

Both the Case-Shiller House Price Index (HPI) and the Federal Housing Finance Agency (FHFA) HPI for February were released today. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).

Note that for the Case-Shiller Home Price Indices "February" is a 3-month average of December, January and February prices.

The MoM increase in Case-Shiller was at 1.90%. This is the largest MoM increase in the Case-Shiller index on record (since 1975), and stronger than any month during the housing bubble or during the late ‘70s with high inflation.

FHFA House Price Index

On the FHFA index: FHFA House Price Index Up 2.1 Percent in February; Up 19.4 Percent From Last Year

House prices rose nationwide in February, up 2.1 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices rose 19.4 percent from February 2021 to February 2022. The previously reported 1.6 percent price change for January 2022 remained unchanged. …

“House prices rose to set a new historical record in February,” said Will Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics. “Acceleration approached twice the monthly rate as seen a year ago. Housing prices continue to rise owing in part to supply constraints.”
emphasis added

This is the monthly and quarterly indexes. Here is a graph from the FHFA report showing the annual change by region for February 2022 compared to February 2021. 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 Shows Annual Home Price Gains Increased To 19.8% In February

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 19.8% annual gain in February, up from 19.1% in the previous month. The 10-City Composite annual increase came in at 18.6%, up from 17.3% in the previous month. The 20-City Composite posted a 20.2% year-over-year gain, up from 18.9% in the previous month. …

“U.S. home prices continued to advance at a very rapid pace in February,” says Craig J. Lazzara, Managing Director at S&P DJI. “The National Composite Index recorded a gain of 19.8% for the 12 months ended February 2022; the 10- and 20-City Composites rose 18.6% and 20.2%, respectively. All three composites reflect an acceleration of price growth relative to January’s level.
...
“The macroeconomic environment is evolving rapidly and may not support extraordinary home price growth for much longer. The post-COVID resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response. We may soon begin to see the impact of increasing mortgage rates on home prices.”
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 2.3% in February (SA). The Composite 20 index is up 2.4% (SA) in February. The National index is 57% above the bubble peak (SA), and up 1.9% (SA) in February.  The National index is up 112% from the post-bubble low set in February 2012 (SA).

The Composite 10 SA is up 18.6% year-over-year.  The Composite 20 SA is up 20.2% year-over-year. The National index SA is up 19.8% 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 February 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 very low (like now), prices rise quickly.

In February, the months-of-supply was at 1.7 months, and the Case-Shiller National Index (SA) increased 1.90% month-over-month.  The black arrow points to the February 2022 dot. In the March existing home sales report, the NAR reported months-of-supply increased to 2.0 months.

My sense is the Case-Shiller National annual growth rate of 19.99% in August 2021 was probably the peak YoY growth rate, although this was close! 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!

Since Case-Shiller is a 3-month average, and this report was for February (includes December and January), this included price increases when mortgage rates were significantly lower than today. In December, the Freddie Mac PMMS averaged 3.1% for a 30-year mortgage, and 3.4% in January. Currently mortgage rates are around 5.32%.

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