Yesterday NAR released existing home sales and median home price information that showed gains of 5.1 percent in prices in May 2014 compared to May 2013, the same pace of year over year growth as in April and notably slower than double-digit trends in summer/fall 2013.
Today, both the FHFA and S&P/Case-Shiller released their housing price index data for April. Both data series showed continued gains in home prices with some deceleration suggesting that the pace of home price increase should fall back into a more normal range in the next few months as NAR data has indicated.
Case-Shiller reported gains of 10.8 percent each for the 10- and 20-city indexes in the year ending April 2014, while FHFA reported home price gains of 5.9 percent for the same period.
NAR reports the median price of all homes that have sold while FHFA and Case-Shiller 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 had risen by more than the weighted repeat sales index—which computes price change based on repeat sales of the same property.
The reason Case-Shiller’s reported price growth now exceeds NAR’s is likely a result of the data lag. Case Shiller uses public records data which has a reporting lag. To deal with the lag, Case Shiller data is based on a 3 month moving average, so reported April prices include information from repeat transactions closed in February, March, and April. For this reason, the changes in the NAR median price tend to lead Case Shiller.
FHFA 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.