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

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

House Prices

The Case-Shiller National Index was increased 1.0% year-over-year in August and will turn more positive YoY in September (based on other data).

The MoM increase in the seasonally adjusted Case-Shiller National Index was at 0.9%. This was the seventh 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 further YoY in the September Case-Shiller index. The NAR reported median prices were up 2.8% YoY in September, down from 3.9% YoY in August. ICE / Black Knight reported prices were up 4.3% YoY in September, up from 3.7% YoY in August to new all-time highs, and Freddie Mac reported house prices were up 5.2% YoY in September, up from 4.3% YoY in August - 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 increase further in the report for September.

In real terms, the Case-Shiller National index is down 3.1% 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 Solidly Above 7%