Case Shiller Housing Price Index

Tuesday, January 26, 2016
·         Today, Case Shiller released their housing price index data for November 2015.  Case Shiller data showed that house prices rose more than 5 percent in all three indices since November 2014.  The 10-city composite and national indices gained 5.3 percent, while the 20-city composite rose 5.8 percent year over year.  Each index’s November year over year gain was higher than the October year over year gain.
·         After growing at a fairly steady pace earlier in 2015, the Case Shiller indices have begun to show acceleration or faster growth in prices in the last 4 to 9 months, depending on the specific index used. 
·         Last week the Federal Housing Finance Agency (FHFA) and the National Association of Realtors® (NAR) reported price data. 
·         FHFA data showed that prices were up 5.9 percent in November from one year ago, slightly slower than the 6.1 percent year over year growth seen in September and October, but faster than growth rates seen in the earlier part of the year.
·         NAR data showed that prices grew at a 6.2 percent pace from November 2014 to November 2015.  NAR also reported on new December data which showed a bump up to a 7.6 percent growth from one year ago.
·         Recent housing price data at the national level suggests that home prices continue to increase at a strong pace and the pace of increase may be accelerating. Strong buyer demand and low inventories coupled with still relatively low levels of new construction are continuing to push prices up and keep housing market tipped in favor of sellers in most local markets.
·         Of course, potential buyers and sellers should be sure to put the national numbers in the context of what is going on in their local markets. The fastest overall growth rates were seen in Portland (11.1%), San Francisco (11.0%), and Denver (10.9%) in the year ending November 2015. By contrast, Chicago (2.0%), Washington DC (2.1%), and Cleveland (2.2%) were the slowest growing markets. Data shows that sellers in these somewhat weaker areas may not have as much power to demand higher prices for their homes given the local market. How does your market compare to the national price trends?
·         NAR reports the median price of all homes that have sold while Case Shiller and the Federal Housing Finance Agency report the results of a weighted repeat-sales index. 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 November prices include information from repeat transactions closed in September, October, and November. For this reason, changes in the NAR median price tend to lead Case Shiller and may suggest that additional strong price growth could be on the horizon. The current strong pace is a reflection of continued demand from buyers in an economy where jobs are still being created and a low supply of homes for sale. While affordability is a concern in an environment where home price growth is outpacing income growth and mortgage rates are expected to rise, demand has generally been strong enough to shake off this concern.

Danielle Hale, Director of Housing Statistics

As a Research Economist at NAR, Danielle studies tax issues, the wealth impact of home ownership, and different measures of home prices.

More Posts