Home Prices Slowing Their Momentum, Catching up With Housing

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Both of the major
home price indexes that were released this morning showed continued
in the rate of appreciation, even though July is usually one of
the strongest months of the year for home price gains. The Federal Housing
Finance Agency’s (FHFA’s) House Price Index (HPI) and most variations of the three
of the S&P CoreLogic Case Shiller Indices turned in slightly smaller
increases in July than in June, both month-over-month and on an annual basis.

The Case-Shiller
National Index which covers all nine U.S. Census districts, reported prices
were up 6.0 percent compared to July 2017. Last month’s June to June comparison
put the gain at 6.2 percent.  The monthly
figures also softened. Before seasonal adjustment, the Index posted a gain of
0.4 percent. and 0.2 percent after adjustment. The June number were 0.8 percent
and 0.3 percent.

The 10-City
Composite index was up 5.5 percent for the 12 months ended in July and the
20-City Composite rose 5.9 percent.  Each
gain was 0.5 point smaller than 12-month increase in June.
The 10-City and 20-City
Composites reported month over month increases of 0.2% and 0.3%respectively
before seasonal adjustment  (compared to
0.4 and 0.5 percent the previous month). After adjustment the 10-City was flat,
and the 20-City Composite rose 0.1 percent compared to an 0.1 percent change
for each the previous month.  Eighteen of
20 cities reported increases in June before seasonal adjustment, while 13 of 20
cities reported increases after seasonal adjustment.

Going into July
Econoday said the 20-City, which is the component it tracks, had missed its
consensus estimate for four straight months. This sort of makes it five. While
the seasonally adjusted number came in where forecast, up 0.1 percent, Econoday’s
analysts had expected a non-adjusted 0.5 percent increase and a year-over-year
gain of 6.3 percent.



Las Vegas, Seattle
and San Francisco continued to report the highest year-over-year gains among
the 20 cities.  Las Vegas led the way for
the second month with a 13.7 percent year-over-year price increase, followed by
Seattle and San Francisco, up 12.1 percent and 10.8 percent respectively. Five
of the 20 cities reported greater price increases in the year ending July 2018
versus the year ending June 2018.

Rising homes
prices are beginning to catch up with housing,” says David M. Blitzer, Managing
Director and Chairman of the Index Committee at S&P Dow Jones Indices.
“Year-over-year gains and monthly seasonally adjusted increases both slowed in
July for the S&P Corelogic Case-Shiller National Index and the 10 and
20-City Composite indices. The slowing is widespread: 15 of 20 cities saw
smaller monthly increases in July 2018 than in July 2017. Sales of existing
single family homes have dropped each month for the last six months and are now
at the level of July 2016. Housing starts rose in August due to strong gains in
multifamily construction. The index of housing affordability has worsened
substantially since the start of the year.

“Since home prices
bottomed in 2012, 12 of the 20 cities tracked by the S&P Corelogic
Case-Shiller indices have reached new highs before adjusting for inflation. The
eight that remain underwater include the four cities which led the home price
boom:   Las Vegas, Miami, Phoenix and
Tampa. All are enjoying rising prices, especially Las Vegas which currently has
the largest year-over-year increases of all 20 cities. The other cities where
prices are still not over their earlier peaks are Washington DC, Chicago, New
York and Atlanta. “             

As of July, the
average home prices for the metropolitan statistical areas within the two
composites are back to their winter 2007 levels.  The National Index is now 11.2 percent higher
than its peak in the summer of 2006 and the 20-City is 3.5 percent higher. The
10-City Composite has also now topped its pre-crash high and is up 0.3 percent
from its prior record.

FHFA’s HPI is also showing some
weakness.  It rose 0.2 percent compared
to June although the June gain, originally estimated at 0.2 percent was revised
to 0.3 percent. On an annual basis home prices rose 6.4 percent compared to the
6.5 percent posted for June.



Of the nine census divisions three saw
price fall.  The East and the West South
Central, were down compared to June by 0.5 and 0.1 percent respectively and the
Mid-Atlantic dropped 0.2 percent. The largest gain was 0.2 percent in the
Pacific Division.
The monthly gains were smaller than June’s in every division
except the South Atlantic. Year-over-year changes ranged from 4.7 percent in
New England to 8.7 percent in the Mountain Division.

The FHFA monthly HPI is calculated using home sales price information
from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.  The Index was benchmarked to 100 in January
1991 and was at 265.0 in July.

The S&P
CoreLogic Case-Shiller Home Price Indices are constructed to accurately track
the price path of typical single-family home pairs for thousands of individual
houses from the available universe of arms-length sales data. The National U.S.
Home Price Index tracks the value of single-family housing within the United
States. The indices have a base value of 100 in January 2000; thus, for
example, a current index value of 150 translates to a 50 percent appreciation
rate since January 2000 for a typical home located within the subject

The National Index set another new record in
July, a reading of 205.35. June’s peak was 204.48 .  The 10- and 20-City Composites had readings
of 227.05  and  213.76  respectively. 
Los Angeles claims the highest index at 283.20.  Cleveland had the lowest reading at 123.57.

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