The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index
reported a 5.5 percent annual gain in April, down from 5.6 percent in March. The 10-City Composite annual increase came in at 4.9 percent, lower than the 5.2 percent level in the previous month, and the 20-City Composite posted a 5.7 percent year-over-year gain, which was below the 5.9 percent level set in March.
Among the major metro markets, seven cities reported greater price increases in the year ending April versus the year ending March. Seattle recorded the greatest gains with a 12.9 percent year-over-year price increase, followed by Portland with 9.3 percent and Dallas with an 8.4 percent increase.
Before the seasonal adjustment, the National Index posted a month-over-month gain of 0.9 percent in April, while the 10-City Composite posted a 0.8 percent increase and the 20-City Composite reported a 0.9 percent increase. After the seasonal adjustment, the National Index and the 10-City Composite each recorded a 0.2 percent month-over-month increase and the 20-City Composite posted a 0.3 percent month-over-month increase. Eighteen of 20 cities tracked in this study reported increases in April before the seasonal adjustment, but only 13 saw increases after the seasonal adjustment.
“As home prices continue rising faster than inflation, two questions are being asked: Why? And, could this be a bubble,” said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Since demand is exceeding supply and financing is available, there is nothing right now to keep prices from going up. The increase in real, or inflation-adjusted, home prices in the last three years shows that demand is rising. At the same time, the supply of homes for sale has barely kept pace with demand and the inventory of new or existing homes for sale shrunk down to only a four- month supply. Adding to price pressures, mortgage rates remain close to four and affordability is not a significant issue.”
Blitzer added that “conditions appear favorable for avoiding a crash,” although he theorized that “any increase in mortgage interest rates would dampen demand.”