Case-Shiller 20 City Home Price Index September 2017 Now At 6.2 % Year-Over-Year Growth

The non-seasonally adjusted Case-Shiller home price index (20 cities) year-over-year rate of home price growth grew from a downwardly revised 5.8 % to 6.2%. The index authors stated, “Most economic indicators suggest that home prices can see further gains.”

Analyst Opinion of Case-Shiller HPI

Many pundits believe home prices are back in a bubble. Maybe, but the falling inventory of homes for sale keeps home prices relatively high. I continue to see this a situation of supply and demand. It is the affordability of the homes which is becoming an issue for the lower segments of consumers. This is the highest year-over-year growth since July 2014.

20 city unadjusted home price rate of growth grew 0.4 % month-over-month. [Econintersect uses the change in year-over-year growth from month-to-month to calculate the change in rate of growth]

Note that Case-Shiller index is an average of the last three months of data.

The market expected:

Consensus Range Consensus Actual 20-city, SA – M/M 0.3 % to 0.5 % 0.4 % +0.5 % 20-city, NSA – M/M 0.4 % to 0.5 % 0.4 % +0.4 % 20-city, NSA – Yr/Yr 6.0 % to 6.3 % 6.2 % +6.2 %

S&P/Case-Shiller Home Price Indices Year-over-Year Change

Comparing all the home price indices, it needs to be understood each of the indices uses a unique methodology in compiling their index – and no index is perfect.

The way to understand the dynamics of home prices is to watch the direction of the rate of change. Here home price growth generally appears to stabilize (rate of growth not rising or falling).

There are some differences between the indices on the rate of “recovery” of home prices.

A synopsis of Authors of the Leading Indices:

Case Shiller’s David M. Blitzer, Chairman of the Index Committee at S&P Indices:

Home prices continued to rise across the country with the S&P CoreLogic Case-Shiller National Index rising at the fastest annual rate since June 2014. Home prices were higher in all 20 cities tracked by these indices compared to a year earlier; 16 cities saw annual price increases accelerate from last month. Strength continues to be concentrated in the west with Seattle, Las Vegas, San Diego and Portland seeing the largest gains. The smallest increases were in Atlanta, New York, Miami, Chicago and Washington. Eight cities have surpassed their pre-financial crisis peaks.

Most economic indicators suggest that home prices can see further gains. Rental rates and home prices are climbing, the rent-to-buy ratio remains stable, the average rate on a 30-year mortgage is still under 4%, and at a 3.8-month supply, the inventory of homes for sale is still low. The overall economy is growing with the unemployment rate at 4.1%, inflation at 2% and wages rising at 3% or more. One dark cloud for housing is affordability – rising prices mean that some people will be squeezed out of the market.