Case-Shiller: Price Gains Continue Slowing

NEW YORK CITY—The slowdown in home price growth continued in March, as the S&P/Case-Shiller Home Price Indices released Tuesday showed a 12.4% year-over-year gain for the 20-City Composite Index, the smallest increase since last July, while the 10-City Composite rose 12.6% Y-O-Y. However, two cities in the 20-city index, Dallas and Denver, have reached all-time peaks, and separately the Federal Housing Finance Agency reported Tuesday that home prices have now increased for 11 consecutive quarters.

Bloomberg reported Tuesday that a survey of 28 economists yielded a median projection of an 11.8% Y-O-Y increase in the 20-city index. Estimates ranged from gains of 10.8% to 12%, slightly shy of the actual gains.

The Y-O-Y changes in the 10- and 20-city indices “suggest that prices are rising more slowly,” says David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. “Annual price increases for the two composites have slowed in the last four months and 13 cities saw annual price changes moderate in March. The National Index also showed decelerating gains in the last quarter.” All 20 cities rose Y-O-Y, while all but New York City increased from a month earlier.

He notes that housing indicators remain “mixed,” with virtually all of April's rebound in new housing starts driven by multifamily construction rather than single-family. Blitzer adds that “new home sales also rebounded from recent weakness, but remain soft. Mortgage rates are near a seven-month low,” but recent comments from the Federal Reserve point to bank lending standards as a problem, says Blitzer. Other recent comments from the Fed have suggested that “student loan debt is preventing many potential first-time buyers from entering the housing market.”

Meanwhile, the FHFA said Tuesday that its seasonally adjusted House Price Index rose 1.3% in Q1, and 6.6% Y-O-Y. “Although the first quarter saw relatively weak real estate transaction activity—in part due to seasonal factors—home prices continued to push higher in the first quarter,” says FHFA principal economist Andrew Leventis. “Modest inventories of homes available for sale likely played a significant role in driving the price increase, which was similar to appreciation in the preceding quarter.” Leading the way in home price appreciation were Nevada, the District of Columbia, California, Arizona and Florida.