Slow and steady, not flashy or fast… home prices rose 6% y/y nationally during July 2018, down from 6.2% y/y in June 2018, according to the latest S&P CoreLogic Case Shiller Home Price Index. Its 20-city index rose 5.9% y/y in July, down from 6.4% in June while its 10-city index rose 5.5% annually, down from 6.0% in June 2018.
Two things seem to be driving this slow rate of rising home prices…more and more prospective buyers are hitting the affordability wall and more and more sellers are beginning to price their homes to sell rather than to fulfill aspirational fantasy prices.
“Rising home prices are beginning to catch up with housing,” said David Blitzer, managing director and chairman of the S&P Dow Jones Indices’ index committee. “Sales of existing single-family houses have dropped each month for the last six months and now markets are selling at the same level as July 2016. “
Blitzer continued. “Housing statistics rose in August 2018 due to strong gains in multi-family construction. The affordability index has worsened substantially since the start of the year.”
Las Vegas, Seattle and San Francisco led the pack in terms of biggest annual gains at 13.1%, 12.1% and 10.8% respectively. Within CoreLogic’s 20-city index, 5 cities saw price gains accelerate annually compared to June 2018. When comparing prices with the bottom of housing prices in this cycle, home prices in 12 of those 20 cities hit new highs.
Las Vegas, the leader in price gains, along with Miami, Phoenix and Tampa were among the hardest hit during the financial crisis and all of those cities have seen the greatest gains.
Remember that in September 2018, one quarter or 25% of all listed homes for sale received a price reduction, according to Redfin. Remember that homes are staying on the market longer. And remember too that markets previously considered the “hottest” are seeing sales slowing the most.
July’s FHFA house price index is expected to come in at +0.3% m/m, higher than June’s index at +0.2% m/m.