NEW YORK CITY—“Home price increases appear to be unstoppable,” says S&P Dow Jones Indices' David M. Blitzer in reference to the latest S&P CoreLogic Case-Shiller Indices, released Tuesday. One of the three indices, the US National Home Price NSA Index, covering all nine US census divisions, reached a new high with a 6.1% annual gain in August, up from 5.9% in July. The NSA Index has hit new peaks in each of the past nine months.
However, even as Blitzer cites the current momentum, the managing director and chairman of the index committee at S&P Dow Jones Indices also says that the monthly gains won't occur indefinitely. “Measures of affordability are beginning to slide, indicating that the pool of buyers is shrinking,” says Blitzer. “The Federal Reserve is pushing short-term interest rates upward and mortgage rates are likely to follow over time, removing a key factor supporting rising home prices.”
Both of the other two Case-Shiller indices, the 10-City Composite and 20-City Composite, saw higher annual gains in August compared to the previous month. The 10-City Composite annual increase came in at 5.3%, up from 5.2% the previous month, while the 20-City Composite posted a 5.9% year-over-year gain, up from 5.8% in July.
Both composite indices both posted 0.5% month-over-month increases. Nineteen of 20 cities reported increases in August both before and after seasonal adjustment. The exception was Atlanta, in which seasonally adjusted prices slipped 0.2% in August.
Seattle, Las Vegas, and San Diego reported the highest year-over-year gains among the 20 cities. In August, Seattle led the way with a 13.2% Y-O-Y price increase, followed by Las Vegas with an 8.6% increase and San Diego with a 7.8% increase.
The Case-Shiller figures for August, the most recent month for which data are available, don't reflect the impact of Hurricanes Harvey and Irma. Bloomberg Business reported Tuesday that the coming months are likely to see average home prices nationwide increase further due to constricted supplies in Florida and Texas following these storms.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
