The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported a 5.5 percent annual gain in September, down from 5.7 percent last month. According to the index, the highest year-over-year gains were reported in Las Vegas, San Francisco, and Seattle, with price increases of 13.5 percent, 9.9 percent, and 8.4 percent, respectively.
According to Cheryl Young, Senior Economist for Trulia, this month’s data indicates a slowing home market.
“Rising mortgage rates, high prices, and low supply have caught up with homebuyers who can no longer justify purchases as the market slows,” said Young. “Meanwhile the ascent of mortgage rates exacerbates affordability concerns, especially for first-time home buyers.”
Danielle Hale, Chief Economist, Realtor.com, had a more optimistic outlook, noting the increasing number of homeowners.
“As long as home prices continue to rise faster than wages, buy affordability will continue to struggle. This is especially true for first-time homebuyers who don't benefit from the accumulation of home equity that comes with rising home prices,” said Hale. “But Americans are finding a way to become homeowners. The homeownership rate has steadily climbed from an all-time low of 62.9 percent in the second quarter of 2016 to 64.4 percent in the third quarter of 2018. Further increases in the homeownership rate will mean that future home price increases will mean wealth accumulation for a greater share of Americans.”
Discussing the low but recovering inventory's impact on home prices Dr. Ralph B. McLaughlin, Deputy Chief Economist and Executive of Research and Insights for CoreLogic said: “Supply and demand are falling into balance in the housing market. On the supply side, slow but steady growth in inventory is providing relief to homebuyers. On the demand side, years of price growth outpacing income growth, as well as rising mortgage rates, is making the cost of buying homes increasingly expensive.”
Tian Liu, Chief Economist, Genworth Mortgage Insurance called dropping prices on lower-priced homes a “replay of the 2013-14 housing slowdown, which also was triggered by a significant increase in interest rates over a short period of time.”
Find the full S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index here.