In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses home price measures.
- FHFA and Case Shiller data today both confirmed that home price increases continued in July. Previously, NAR released median price data that showed a gain of 12.9 percent for the year ending in July. Data from FHFA today showed a gain of 8.8 percent while CaseShiller estimated the gain for the year ending July to be 12.4 percent for the 20-city index—nearly exactly in line with CoreLogic’s earlier estimate. Case Shiller’s 10-city index showed a year over year gain of 12.3 percent. This is the 5th consecutive month of double-digit year over year gains in both Case Shiller indexes.
- NAR reports the median price of all homes that have sold while Case Shiller, CoreLogic, and FHFA report the results of a weighted repeat-sales index. Because home sales among higher priced properties have been growing more than among lower price tiers, the NAR median price has risen by more than the weighted repeat sales index—which computes price change based on repeat sales of the same property.
- FHFA differs primarily from Case Shiller and CoreLogic because it sources data primarily from Fannie and Freddie mortgages, transactions using prime conventional financing, and misses out on cash transactions as well as jumbo, subprime, and government backed transactions such as those using VA or FHA financing. Case Shiller and CoreLogic use public records data which offer very comprehensive data in most areas, but sometimes have a reporting lag.
- To deal with the lag, Case Shiller data is based on a 3 month moving average, so reported July prices include information from repeat transactions closed in May, June, and July. For this reason, the changes in the NAR median price tend to lead Case Shiller. NAR data showed continued double-digit growth in August, so expect repeat prices to follow suit.
- By market in the 20 cities covered by Case Shiller, metros in the West lead the pack. Las Vegas posted the biggest year over year increase with a gain of 27.5 percent followed closely by San Francisco at 24.8 percent. Los Angeles and San Diego rounded out the top 4. The slowest growing metro in the last year according to Case Shiller was New York where home prices increased only 3.5 percent. Still, all 20 metros showed year over year gains, and 11 of these were double-digit gains.
- FHFA releases data at the regional level and it confirms the trend seen in other measures. The most robust gains were in the West. Year over year prices rose 20.8 percent in the Pacific division which includes Hawaii, Alaska, Washington, Oregon, and California and 12.7 percent in the Mountain division which includes Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, and New Mexico.