Core Logic Case Shiller just released its US National Home Price NSA Index for November 2017. Covering all nine US census divisions, the annual gain in November was +6.2%, up from +6.1% in October 2017.

Seattle led the pack with +12.7 y/y gain. Las Vegas followed Seattle with a +10.6% y/y gain and San Francisco came in third at +9.1% y/y gain. In Seattle, low (-$370,000)/mid (+$370,000/high (+$600,000) price points all increased at approximately the same levels. In Las Vegas, the low (-$235,000) price point increased more than the mid (+$235,000) price point and the mid price point increased more than the high (+$317,000) price point.

All together, six cities reported greater price increases y/y ending in 11/17 from 10/17.

Home prices continued to rise three times faster than the rate of inflation in November 2017. Home price increases have dialed in at +5% for more than 16 months nationally. In Core Logic’s 20 city composite index (chart below), this increase pace has continued for the last 28 consecutive months.

David M. Blitzer, Managing Director and Chairman of the Index Committee for the S & P Dow Jones Index, does not see that demand for housing as the primary factor in rising home prices. Why? Because there has been slow population and slow income growth.

He also does not see rising construction costs as measured by the National Income and Product Accounts as a factor in explaining rising home prices. However, Blitzer does see the rate of new single-family construction has being a factor in home price increases.

Since 2010, new single-family home construction has slowed to 632,000 units annually. This number is less than the annual rate of new construction, 698,000, in 2007-2009 during the financial crisis. During the boom years of 2001-2006, new construction of single-family homes came in at 1.5M units annually.

Blitzer said, “Without more supply, home prices may continue to substantially outpace inflation.”

“Looking across the 20 cities covered here,” Blitzer added, those that enjoyed the fastest price increases before the 2007-2009 financial crisis are again among those cities experiencing the largest gains…San Diego, Los Angeles, Miami and Las Vegas.”

Seattle 12.7%
Las Vegas 10.6%
San Francisco 9.1%
San Diego 7.4%
Tampa 7.1%
Dallas 7.0%
Denver 7.0%
Detroit 7.0%
Los Angeles 7.0%
Portland 6.9%
Composite 20 6.4%
Boston 6.3%
US National Average 6.2%
Charlotte 6.1%
New York 5.8%
Phoenix 5.7%
Minneapolis 5.6%
Atlanta 5.2%
Cleveland 4.1%
Miami 4.1%
Chicago 3.6%
Washington DC 3.1%