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Home Prices Inch Up

Phil Hall
Jul 25, 2017
The latest data on home prices includes a non-surprise and a surprise

The latest data on home prices includes a non-surprise and a surprise. The non-surprise: prices are still going up. The surprise: the rate of price increases seems to have slowed, at least for the time being.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.6 percent annual gain in May, which is the same level as the prior month. The 10-City Composite annual increase was 4.9 percent, slightly below the five percent gain from April, while the 20-City Composite posted a 5.7 percent year-over-year gain, slightly below the 5.8 percent level in April.
Before the seasonal adjustment, the National Index posted a month-over-month gain of one percent in May while the 10-City and 20-City Composites posted increases of 0.7 percent and 0.8 percent, respectively. After the seasonal adjustment, the National Index recorded a scant 0.2 percent month-over-month increase while the 10-City Composite remained stagnant with no month-over-month increase and the 20-City Composite posted a puny 0.1 percent month-over-month increase. All 20 cities reported increases in May before the seasonal adjustment, but only 14 cities saw increases after the seasonal adjustment.
“Home prices continue to climb and outpace both inflation and wages,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “Housing is not repeating the bubble period of 2000-2006: price increases vary across the country unlike the earlier period when rising prices were almost universal; the number of homes sold annually is 20 percent less today than in the earlier period and the months’ supply is declining, not surging. The small supply of homes for sale, at only about four months’ worth, is one cause of rising prices. New home construction, higher than during the recession but still low, is another factor in rising prices.”
Separately, the Federal Housing Finance Agency is reporting that home prices were up in May by 0.4 percent from April, with April’s previously reported 0.7 percent increase revised downward to reflect a 0.6 percent increase. On a year-over-year basis, however, home prices rose by 6.9 percent.
For the nine census divisions, seasonally adjusted monthly price changes from April to May ranged from -0.5 percent in the Middle Atlantic division to one percent in the West South Central division. There was more activity in the 12-month measurement, ranging from a four percent increase in the Middle Atlantic division to an 8.7 percent upswing in the Pacific division.

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