Today, Case Shiller released their housing price index data for November which showed that house prices rose 4.2 percent from November one year ago for the 10-city composite, 4.3 percent for the 20-city composite, and 4.7 percent for the national index.
While FHFA and NAR reported growing, even accelerating prices which we covered here last week, the Case Shiller headline shows a decline from the month of October to November of 0.1 to 0.3 percent (national and 10-city index). A closer look will reveal that this data is not seasonally adjusted and thus is not ideal for month to month comparisons. Using the seasonally adjusted data, we find that prices increase 0.7 to 0.8 percent from October to November. This notable rate of increase is similar to what was reported by the FHFA and marks the 4th month of accelerating prices in the 10- and 20- city indexes and the 6th month of acceleration in the national index. On a year over year basis, however, only the national index shows a very slight acceleration in prices.
Both FHFA and NAR data showed that the November annual growth rate in prices was higher than that observed in previous months. NAR’s December price data showed growth slightly under November’s pace, but at 6.3 percent, above what might be considered a normal rate of home price growth. As long as tight housing inventory persists, which we expect to see as long as housing starts remain at a subpar level, we expect to see upward pressure on home prices which adds an additional challenge to potential first-time buyers.
Case Shiller’s city by city data demonstrates this phenomenon. Cities where prices are growing above normal pace, such as San Francisco (8.9%), Miami (8.6%), Dallas (7.7%), Las Vegas (7.7%), and Denver (7.5%), tend to have tighter inventory.
In other areas where growth rates have been slower, like Cleveland (0.6%), Minneapolis (1.5%), New York (1.5%), Phoenix (1.9%), and Washington DC (1.9%), inventory has tended to be more available.