S&P CoreLogic Case-Shiller Continues to Slow

There were unexpected economic and financial twists in 2021, and the housing market experienced its fair share of surprises. Demand continued to surge and exceeded 2020 levels while availability of for-sale homes in many locales continued to decline to record-low levels. 

Consequently, the latest S&P CoreLogic Case-Shiller slowed for the second consecutive month and was up 19.1% year over year, down from the 19.7% increase the month prior.

The month-to-month index also slowed to a non-seasonally adjusted 0.84%, down from a 0.97% increase in September. 

Nevertheless, while the monthly gains have slowed, they are still notably above the average 0.43% decline seen between 2006 and 2019, suggesting the October 2021 increase is still beating the seasonal decline typical of October. 

Phoenix Still Hot, But Cooling

For the 28th consecutive month, Phoenix had the strongest home price growth among the 20 markets, surging 32.3% in October, but is down from September’s non-seasonally adjusted rate of 33.1%.

Tampa, Florida, ranks 2nd with a 29% gain, while Miami ranks third with a 25.7% increase in October. Both cities have experienced acceleration in annual gains. Four other metro areas experienced acceleration in annual gains since September, including Las Vegas, Los Angeles, Atlanta and Charlotte, North Carolina.

Home price growth in San Diego, which has been trending near the top of the 20-city list since the onset of the pandemic, slowed to a 24.2% annual increase, bumping it down to the 6th place for strongest home price growth.

Chicago and Minneapolis are still the laggers, both up 11.5% in October. Metros with the largest slowdown in annual gains are Washington (from 13.7% to 12%) and Boston (from 16.8% to 15.1%). Fifteen out of 20 cities are experiencing a slowdown in year-over-year gains. 

October Marks 6th Consecutive Month of Slowing Gains

Overall, October marks the sixth consecutive month of slowing monthly gains. The peak occurred in April 2021 when the non-seasonally adjusted monthly increase jumped to 2.32% (April’s monthly gains generally averaged 1% from 2006 to 2020). As monthly gains continue to decelerate, so too will the rate of annual home price appreciation. 

According to the latest CoreLogic HPI Forecast, home price growth will slow to about 3% by the last quarter of 2022. However, some markets with exceptionally limited inventory and strong income growth may experience lesser declines.

Acceleration of the 10- and 20-city composite indexes also continued to slow from July peak gains, and were up 17.1% and 18.4% year over year, respectively. In July, the indexes recorded gains of 19.2% and 20%, respectively. Robust demand in smaller, warmer and more affordable areas is reflected in continually stronger gains in the 20-city index.

Compared to the 2006 peak, the 10-city composite is now 29% higher, while the 20-city composite is 35% higher. Adjusted for inflation, the 10-city index is down 3%, while the 20-city index is up 2% compared to the 2006 peak.