Case-Shiller National Index up 20.4% Year-over-year in April

FHFA: "Increasing mortgage rates have yet to offset demand enough to deter the strong price gains"

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

The MoM increase in Case-Shiller was at 1.50%. This was down from the record 2.11% in the March report and was below the 1.71% in April 2021 (so the year-over-year change declined slightly).

FHFA House Price Index

On the FHFA index: FHFA House Price Index Up 1.6 Percent in April; Up 18.8 Percent from Last Year

House prices rose nationwide in April, up 1.6 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices rose 18.8 percent from April 2021 to April 2022. The previously reported 1.5 percent price change for March 2022 was revised upward to 1.6 percent. …

“House price appreciation continues to remain elevated in April," said Will Doerner, Ph.D., Supervisory Economist in FHFA's Division of Research and Statistics. "The inventory of homes on the market remains low, which has continued to keep upward pressure on sales prices.  Increasing mortgage rates have yet to offset demand enough to deter the strong price gains happening across the country."
emphasis added

This is the monthly index. Here is a graph from the FHFA report showing the annual change by region for April 2022 compared to April 2021. Prices have increased sharply everywhere, but especially in the Mountain, and South Atlantic regions. Note that the Year-over-year increase is smaller this year, compared to the YoY increase in April 2021, in the New England and Middle Atlantic regions.

Case-Shiller House Prices

From Diana Olick at CNBC: Home price increases slowed for the first time in months in April, says S&P Case-Shiller

Prices rose 20.4% nationally in April compared with the same month a year ago, according to the S&P CoreLogic Case-Shiller Index. In March, home prices grew 20.6%. ...

The 10-city composite annual increase was 19.7%, up from 19.5% in March. The 20-city composite posted a 21.2% annual gain, up from 21.1% in the previous month.
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 1.8% in April (SA). The Composite 20 index is up 1.8% (SA) in April. The National index is 63% above the bubble peak (SA), and up 1.5% (SA) in April.  The National index is up 121% from the post-bubble low set in February 2012 (SA).

The Composite 10 SA is up 19.7% year-over-year.  The Composite 20 SA is up 21.2% year-over-year. The National index SA is up 20.4% 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 April 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 April, the months-of-supply was at 2.2 months, and the Case-Shiller National Index (SA) increased 1.50% month-over-month.  The black arrow points to the April 2022 dot. In the May existing home sales report, the NAR reported months-of-supply increased to 2.6 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 April (includes February and March closings), this included price increases when mortgage rates were significantly lower than today. This report includes some homes with contracts signed last December (that closed in February)!

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