Part 2: Current State of the Housing Market; Overview for mid-September

Yesterday, in Part 1: Current State of the Housing Market; Overview for mid-September I reviewed home inventory and sales.

House Prices

The Case-Shiller National Index was unchanged year-over-year in June and will turn positive YoY in July.

The MoM increase in the seasonally adjusted Case-Shiller National Index was at 0.65%. This was the fifth consecutive MoM increase following seven straight MoM decreases.

Most measures of house prices have shown an increase in prices over the last several months, and a key question I discussed in July is Will house prices decline further later this year? I will revisit this question soon.

Other measures of house prices suggest prices will be up YoY over the next few months in the Case-Shiller index. The NAR reported median prices were up 1.9% YoY in July, up from a 0.9% YoY decline in June. Black Knight reported prices were up 2.3% YoY in July to new all-time highs, and Freddie Mac reported house prices were up 2.9% YoY in July, up from 1.6% YoY in June - and also to new all-time highs.

Here is a comparison of year-over-year change in the FMHPI, median house prices from the NAR, and the Case-Shiller National index.

The FMHPI and the NAR median prices appear to be leading indicators for Case-Shiller. Based on recent monthly data, and the FMHPI, the YoY change in the Case-Shiller index will turn positive in the report for July.

In real terms, the Case-Shiller National index is down 3.9% from the peak, seasonally adjusted. Historically it takes a number of years for real prices to return to the previous peak, see House Prices: 7 Years in Purgatory.

30-Year Mortgage Rates are Holding Above 7%