The S&P CoreLogic Case-Shiller national home price index saw a 4.3 percent annual gain in February, down from 4.6 percent the previous month. The Index notes that January 2019’s data indicates that the rate of home price increases across the U.S. has continued to slow, with the the 10-City Composite annual increase came in at 3.2 percent, down from 3.7 percent in the previous month. The 20-City Composite posted a 3.6 percent year-over-year gain, down from 4.1 percent in the previous month.
“Home price gains continue to shrink,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “In the year to January,the S&P CoreLogic Case-Shiller National Index rose 4.3 percent, two percentage points slower than its pace in January 2018. The last time it advanced this slowly was April 2015.”
According to Corelogic Deputy Chief Economist Ralph McLaughlin, this data indicates the spring homebuying season to be “one of balance,” and he expects to see a four percent index growth in February.
“With mortgage rates pulling back from highs not seen since 2011, and inventory continuing on a slow and steady rise, we expect buyers to enter the peak buying season a little more confidently than at the end of 2018,” said McLaughlin. “Homes are now sitting on the market longer, and price cuts are becoming more common, which means sellers need to be more diligent in pricing than in previous years.”
Given Case-Shiller’s data, Tian Liu, Chief Economist at Genworth Mortgage, is not optimistic about the future of home prices, citing higher home values and rising interest rates in recent years, and the end of 2018’s slowdown in buyer activity.
“While interest rates have come down since December 2018, many potential homebuyers continued their wait-and-see approach to avoid overpaying,” said Liu. “As a result, the inventory level continued to rise in January, making any quick recovery in home price growth unlikely.”
Realtor.com Chief Economist Danielle Hale is more optimistic. According to Hale, inventory growth and the buyer’s market suggest a healthier market.
“While 2018 started with a real estate frenzy and ended with a fizzle, 2019's slow start could pick up the pace later in the year, and in fact, February's existing home sales suggests this recovery is already underway," said Hale.
LendingTree Chief Economist Tendayi Kapfidze notes how the housing market’s growth may impact the economy as a whole.
“We do not see the housing market as a risk to the broader economy,” said Kapfidze in a statement. “When we look at prior housing cycles, continued acceleration in home sales and prices would have to come at the cost of increasing leverage; this is how we got in trouble before. Had the market slowed in an orderly fashion in 2003/2004, we may have saved the economy from the woes unleashed later in the decade.”
Find the complete S&P CoreLogic Case-Shiller national home price index here.