Today, S&P Dow Jones Indices and CoreLogic released results for the Case-Shiller Home Prices Indices, which showed an annual increase of 6.4% in April 2018 for national home prices.
Average home prices for the top 10 metropolitan areas increased 6.2%, down from 6.4% from the previous month. The 20-city composite is a 6.6% year-over-year gain, down from 6.7% in March.
Before seasonal adjustment, the National Index gained a 1% increase month over month in April. The 10-city composite increased 0.6% and the 20-city composite increased 0.8%, respectively. After seasonal adjustment, the National Index recorded a month-over-month gain of 0.3% in April.
The 10-city and 20-city composites increased 0.1% and 0.2% month over month, respectively. Before seasonal adjustment, 19 of 20 cities reported increases, while 17 of 20 cities reported increases after seasonal adjustment.
“One factor pushing prices up is the continued low supply of homes for sale. The months-supply is currently 4.3 months, up from levels below 4 months earlier in the year, but still low,” S&P Dow Jones Indices Managing Director and Chairman of the Index Committee David M. Blitzer said.
Seattle, Las Vegas and San Francisco continue to have the highest year-over-year gains among all 20 cities. Seattle took the lead with a year-over-year price increase of 13.1%, Las Vegas had a 12.7% price increase and San Francisco increased 10.9% in price.
Overall, nine of the 20 cities reported greater price increases in the year ending April 2018 versus the previous month.
“Looking back to the peak of the boom in 2006, 10 of the 20 cities tracked by the indices are higher than their peaks; the other 10 are below their high points. The National Index is also above its previous all-time high, the 20-city index slightly up versus its peak, and the 10-city is a bit below,” Blitzer said. However, if one adjusts the price movements for inflation since 2006, a very different picture emerges. Only three cities – Dallas, Denver and Seattle – are ahead in real, or inflation-adjusted, terms. The National Index is 14% below its boom-time peak and Las Vegas, the city with the longest road to a new high, is 47% below its peak when inflation is factored in.”
Zillow Senior Economist Aaron Terrazas states current housing market trends are unusual and creating a false sense of security for homebuyers and sellers.
“In a normal housing market, there is almost always a decently balanced pool of winners and losers. But it has become abundantly clear that current housing trends are far from normal, and that this deck might just be stacked – even against those that are seemingly holding a winning hand,” Terrazas said. “Home sellers, for example, seem to be sitting pretty, ready to cash in on several years of rapidly accruing equity and holding the power when it comes to offers from buyers. But when those sellers need to turn around and become buyers themselves, they end up right back in the losers column, forced to deal with the same intense competition and rapidly rising prices as everyone else.”
Terrazas blames unstable market conditions on the ever-looming threat of low inventory.
“First-time buyers should, in theory, be primed to capitalize on lending standards that have loosened notably since the depth of the recession and mortgage interest rates that remain near historic lows even after their recent rise,” Terrazas said. “But a near-total lack of available inventory in the most affordable segments means these often lower-budget buyers are forced to save longer to buy a more expensive home and may have to push their home searches into more affordable areas.”