​Home Prices Just Had Their First YoY Decline in Eleven Years

This week, the S&P CoreLogic Case-Shiller National Home Price Index showed home prices experiencing their first year-over-year decline since April 2012.

It’s important to note that the Case-Shiller index measures repeat-sales data and reports on a two-month delay, reflecting a three-month moving average. Homes usually go under contract a month or two before they close, so the April data is based on purchase decisions made early this year or late last year.

Also, home prices have not fallen as much as some economists expected because higher mortgage rates (a 30-year fixed mortgage rate was 6.67% this week, almost a point higher than last year) have made current homeowners reluctant to sell.

CoreLogic writes, “While monthly home price gains continued to outpace seasonal trends for the second consecutive month, mortgage rate volatility, along with several other consumers’ concerns this spring (including the debt ceiling, recession risks, layoffs, banking turmoil and a lack of homes for sale) slowed homebuying activity.”

April home sales declined about 10% from the previous month, which contrasts with the typical 10% gain that has historically been recorded between March and April.

CoreLogic’s latest home price index projects that home prices nationally will average a 4% increase in 2023 compared with the previous year.

For April, all metros saw decelerating annual gains. Miami still ranked No. 1, with a 5.2% annual increase in April, but that is down from March’s non-seasonally adjusted rate of 7.7%.

Chicago moved into second after posting a 4.1% year-over-year gain in April.

Atlanta posted the third-highest increase, at 3.5%, while Charlotte, North Carolina saw a 3.4% gain. San Francisco and Seattle both continued to post annual declines, down by a respective 11.1% and 12.4% in April.

Boston and Cleveland posted the nation’s largest monthly gains, 2.9%, and 2.3% respectively, while Miami; Tampa, Florida; Phoenix, and Las Vegas showed the smallest gains of less than 1%.

Bill McBride of the Calculated Risk blog points out that it has been more than 17 years since the housing bubble peaked.

In seasonally adjusted terms, housing prices are 62% above that bubble peak.

“However, in real terms, the National index (SA) is about 11% above the bubble peak (and historically there has been an upward slope to real house prices). The Case Shiller composite 20 [markets] in real terms, is 1% above the bubble peak.

As an example, if a house price was $200,000 in January 2000, the price would be $341,000 today adjusted for inflation (70.5% increase), McBride said.