With today's release of the February S&P/Case-Shiller Home Price, we learned that seasonally adjusted home prices for the benchmark 20-city index were up month over month at 0.7%. The seasonally adjusted year-over-year change has hovered between 4.8% and 5.7% for the last twelve months.
The adjacent column chart illustrates the month-over-month change in the seasonally adjusted 20-city index, which tends to be the most closely watched of the Case-Shiller series. It was up 0.7% from the previous month. The nonseasonally adjusted index was up 5.4% year-over-year.
Investing.com had forecast a 0.8% MoM seasonally adjusted increase and 5.5% YoY nonseasonally adjusted for the 20-city series.
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Here is an excerpt of the analysis from today's Standard & Poor's press release.
"Home prices continue to rise twice as fast as inflation, but the pace is easing off in the most recent numbers," says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. "The yearover-year figures for the 10-City and 20-City Composites both slowed and 13 of the 20 cities saw slower year-overyear numbers compared to last month. The slower growth rate is evident in the monthly seasonally adjusted numbers: six cities experienced smaller monthly gains in February compared to January, when no city saw growth. Among the six were Seattle, Portland OR, and San Diego, all of which were very strong last time."
"Mortgage defaults are an important measure of the health of the housing market. Memories of the financial crisis are dominated by rising defaults as much as by falling home prices (see first chart). Today as well, the mortgage default rate continues to mirror the path of home prices. Currently, the default rate on first mortgages is about three-quarters of one percent, a touch lower than in 2004. Moreover, the figure has drifted down in the last two years. While financing is not an issue for home buyers, rising prices are a concern in many parts of the country. The visible supply of homes on the market is low at 4.8 months in the last report. Homeowners looking to sell their house and trade up to a larger house or a more desirable location are concerned with finding that new house. Additionally, the pace of new single family home construction and sales has not completely recovered from the recession." [Link to source]
The chart below is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-City Composite was tracked. Note that the 20-City, which is probably the most closely watched of the three, dates from 2000. We've used the seasonally adjusted data for this illustration.
For an understanding of the home price data over longer time frames, we think a real, inflation-adjusted visualization of the data is an absolute necessity. Here is the same chart as the one above adjusted for inflation using a subcomponent of Bureau of Labor Statistics' Consumer Price Index, the owners' equivalent rent of residences, as the deflator. Among other things, the real version gives a better sense of the dynamics of the real estate bubble that preceded the last recession.
The next chart shows the year-over-year Case-Shiller series, again using the seasonally adjusted data.
Here is the same year-over-year overlay adjusted for inflation with the Consumer Price Index owners' equivalent rent of residences.
For a long-term perspective on home prices, here is a look at the seasonally and inflation-adjusted Case-Shiller price index from 1953, the first year that monthly data is available. Because the CPI owners' equivalent rent of residences didn't start until 1983, we've used the broader seasonally adjusted Consumer Price Index.
For additional perspectives on residential real estate, here is the complete list of our monthly updates:
