The average home price in the US rose 3.7% annually in March, 0.2% less than the growth seen in February according to the S&P CoreLogic Case-Shiller home price index.
- Home prices continue to slow after seeing major gains last year.
- In 19 of the 20 cities measured, home prices are still up annually, although the gap is narrowing.
- Other housing indicators are also showing weak activity, such as existing home sales.
After multiple double-digit gains last year, home price growth continues to slow down. Seattle home prices rose 13% last year compared to the current rate of 1.6% growth annually.
Las Vegas prices rose 8.2%, the most out of any city, with Tampa and Phoenix also seeing large gains. These cities bore the brunt of the price collapse during the housing crash and are still recovering over a decade later. Prices in Las Vegas and Phoenix are still 20% lower than their peak levels in 2006, and Tampa prices are 9% lower.
National Home Price Index Year over Year (%) pic.twitter.com/qFXrVykoWW
— Eric Basmajian (@EPBResearch) May 28, 2019
The 10-city composite index rose 2.3% annually, 0.2% less than the month before, and the 20-city composite rose 2.7%, down 3% from the prior month. Prices are still higher in Los Angeles, Seattle, Chicago, San Diego and San Francisco but have shown particularly tame growth with home prices in each city only slightly above 1% growth. Prices in New York came in at -0.1%, likely influenced by tax-law changes which capped the amount of state and local taxes that residents can deduct.
Despite the slower pace of growth, home prices are still rising roughly twice as fast as inflation which has been measured at 1.9%. The Case-Shiller Index is at 3.7%. Home price growth is now at the lowest rate in over 6 years.
Managing director and Chairman of the Index Committee at S&P Dow Jones Indices, David Blitzer, said “Given the broader economic picture, housing should be doing better. Mortgage rates are at 4% for a 30-year fixed-rate loan, unemployment is close to a 50-year low, low inflation and moderate increases in real incomes would be expected to support a strong housing market.”
“Measures of household debt service do not reveal any problems and consumer sentiment surveys are upbeat. The difficulty facing housing may be too-high price increases.”
Gold prices have ticked downward today with spot gold last trading down -0.39% at $1,277.97/oz. Spot gold is trading within a tight range of $1,286.63/oz at the high end with a low of $1,276.64/oz on the day. A strong dollar and rebounding equities have likely contributed to selling pressure during today’s session.