Case Shiller Home Prices Index Staggers in October


By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Case Shiller CoreLogic 20-city index FELL in October for the first time in two years, dropping 0.1 percent [the first draft of the Case Shiller report showed a decline in August which was revised].
  • The 10-city index was UP 0.04 percent, the weakest month-month change since October 2016 when it fell 0.11 percent
  • The national index INCREASED 0.10 percent, an improvement since September (when it rose just 0.06 percent);
  • Index ROSE in just nine of the 20 cities surveyed in October; in September the index improved in eight cities;
  • While the index rose year-year in all 20 cities surveyed, the year-year increase in October was weaker in 12 cities than it had been in September

Trends:

  • All three index readings remained above their previous peak;
  • The National Index set a record high for the 22nd straight month;

Data Source: S&P Case Schiller/Core Logic

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Growth in home values, measured by the Case Shiller Core Logic Home Price Index moved sideways in October, barely increasing in the 10-city index but slipping in the 20-city metric. Nationally the index was essentially flat.

In the last year, the national index is down 10.3 percent.

The data suggest realtors will continue to struggle with home sales as even empty nesters are likely to hold on to their nest-egg as the price of homes staggers.

What’s likely at work here is the year-old tax act which reduced the tax advantage that came with home ownership by capping both the mortgage interest and local property tax deductions.

Indeed, home price growth according to both the Case-Schiller 10- and 20-city index has been slowing since April. Nationally, home price growth had been slowing since May; October’s reading marked the first month-month uptick since April.

The October Case-Shiller home price Index report covered the same month in which the National Association of Realtors found the median price of an existing single-family home fell 1.9 percent to $280,800, the lowest since May. (The median price, according to the NAR, rose 3.8 percent in November to $291,400.)

Sales of existing single-family homes fell for six straight months from April through September before edging up in October and November.

The price index slipped 1.1 percent in Seattle, the most of any city surveyed, followed by declines of 0,7 percent in San Francisco, 0.6 percent in Portland and 0.5 percent in Cleveland.  The price index rose 0.7 percent in Phoenix, 0.4 percent in New York and by 0.3 percent in three cities (Charlotte, Las Vegas, and Tampa).

Prices, according to the Case Shiller survey fell 0.3 percent month-month in the Midwest and West while increasing in the South and Northeast, 0.2 percent and 0.3 percent respectively. The index is heavily weighted to the South and West.

Year-year prices rose 12.8 percent in Las Vegas, 7.9 percent in San Francisco, 7.7. percent in Phoenix and 7.3 percent in Seattle.

While the slower price increases could have a positive impact on home sales, those sales still face challenges with increasing mortgage rates.

Hear Mark Lieberman this Friday on P.O.T.U.S. radio’s Morning Briefing, Sirius-XM 124, at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

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