Impact of Interest Rate Pullback Lags December S&P CoreLogic Case-Shiller HPI
The S&P CoreLogic Case-Shiller National Home Price NSA Index covering all nine U.S. census divisions posted a 4.7% annual gain in December, down from 5.1% in the previous month.
S&P CoreLogic Case-Shiller Home Price Indices overall closed out 2018 indicating a slowing in appreciation.
“The annual rate of price increases continues to fall,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Even at the reduced pace of 4.7% per year, home prices continue to outpace wage gains of 3.5% to 4% and inflation of about 2%.”
The 10-City Composite annual increase came in at 3.8%, down from 4.2%. The 20-City Composite saw a 4.2% year-over-year gain, down from 4.6% and slightly less than the 4.8% consensus forecast.
“A decline in interest rates in the fourth quarter was not enough to offset the impact of rising prices on home sales,” Mr. Blitzer added. “The monthly number of existing single family homes sold dropped throughout 2018, reaching an annual rate of 4.45 million in December.”
“The 2018 full year sales pace was 4.74 million.”
Las Vegas, Phoenix and Atlanta led the way in the highest year-over-year gains among the 20 cities. In December, Las Vegas saw an 11.4% year-over-year price increase, followed by Phoenix with an 8.0% gain and Atlanta with a 5.9% gain.
Three of the 20 cities reported greater price increases in the year ending December 2018 juxtaposed to the year ending November 2018.
“Regional patterns continue to shift. Seattle and Portland, OR experienced the fastest price increases of any city from late 2016 to the spring of 2018; in December, they ranked 11th and 16th,” Mr. Blitzer said. “Currently, the cities with the fastest price increases are Las Vegas and Phoenix.”
He also noted that Las Vegas and Phoenix are the furthest below their 2006 peaks of any city followed in the S&P CoreLogic Case-Shiller Indices.