Oct Case Shiller Indices Show Weakest Home Price Growth Since Feb

By Mark Lieberman

Managing Director and Senior Economist

 Home prices rose for the 11th straight month in October but improved at the slowest rate since February according to the Case Shiller Home Price Indexes released Tuesday. The 10- and 20-city indices were each up 0.2 percent in October, down from the 0.7 percent monthly gain in for each index in September. Each index though was up 13.6 percent from October 2012, the strongest year-year gain since February 2006.

Economists surveyed by Bloomberg had expected prices in the 20-city index to dip slightly from September but to show a 13.7 percent year-year gain.

Overall it was the fifth straight month of slower growth in the 10-city index and fourth straight month slower growth in the 20-city index.

Prices fell month-month in October in nine of the 20 cities surveyed. In September only one city – Charlotte – had a month-month price drop.

The 10 city index rose 0.30 points in October to 180.27 after increasing an average of 2.37 points in the first nine months of the year. The 20-city index was also up 0.30 points in October to 165.91. In the previous nine months, the average monthly increase in the 20-city index was 2.17 points.

In October, according to the National Association of Realtors, the median price of an existing single family home dropped 0.5 percent, the fourth straight month-month decline.

Even with the slower growth in September, the two Case Shiller indices have improved by double digits year-year for eight straight months.  The slowdown in growth is likely to ease concerns of a growing housing bubble as personal income growth continues to stagnate.

The month-month decreases were led by Chicago, where prices fell 0.5 percent from September to October. Prices fell 0.4 percent in Washington DC and Denver and dropped 0.3 percent in Boston and Seattle. There was no clear regional pattern in the price drops; prices fell in two Northeast cities, two Midwest cities, two Southern cities and in three cities in the West.

Month-month prices increases were led by Las Vegas prices where rose1.2 percent from September to October and are up 27.1 percent in the last year. Prices rose 1.1 percent in Miami and 0.9 percent in Detroit, Los Angeles and Phoenix. Eight of the 10 cities which showed price increase were in the West (five) or South (three). Prices were flat in New York.

Prices were up year-year in all 20 cities. In addition to Las Vegas, two other cities showed year-year index gains of 20 percent or greater: San Francisco, where prices are up 24.6 percent in the last year and Los Angeles where prices increased 22.1 percent in the last 12 months. San Diego which has seen prices jump 20.9 percent.

The Case-Shiller indices are heavily weighted toward the West: eight of the 20 cities surveyed are in that region. The average increase in the West in October was 1.6 percent. The average increase in the four Midwest cities was 0.18 percent and in the five Southern cities 0.30 percent. Prices dropped an average of 0.23 percent in the three Northeastern cities.

Prices have increased for 25 consecutive months in Phoenix, 20 straight in Los Angeles and 19 straight in Las Vegas. The price dip in San Francisco was the first month-month decline since February 2012.

Despite the July improvement, the 10-city index is down 20.3 percent from its June 2006 high of 226.29 and the 20-city index is off 19.7 percent from its July 2006 peak of 206.52.

Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 am Eastern Time. Follow Mark Lieberman on Twitter at @foxeconomics.

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