Corelogic’s Case-Shiller National Home Price Index [1] reported the 11th-consecutive month of slowing home-price growth, which is now at its lowest levels since 2012. Home prices in the U.S. grew by just 4.3% in February 2019.
The report states that prices for the top 10 metropolitan areas increased 2.6%, which is down from January’s 3.1% increase. The top 20 markets also posted a gain of 3% year-over-year, down 3.5% in January.
“Slowing U.S. home price growth has primarily been driven by affordability constraints in a few of our largest, most expensive housing markets,” said Ralph B. McLaughlin, Deputy Chief Economist and Executive of Research and Insights for CoreLogic. “While we’re not in a buyer’s market yet, several Pacific Coast markets are on the cusp of seeing the first annual declines in home prices since 2012.”
“In places like San Diego, San Francisco, and Los Angeles,” McLaughlin continued, “the proverbial chickens will be coming home to roost this spring because they haven’t been able to find a decently affordable coop.”
The drop in home-price growth correlates to a prior report [2] from the First American Financial Corporation’s February Real Housing Price Index (RHPI) [3], which showed growing affordability in California.
That report noted that real house prices increased 2.9% year-over-year while consumer homebuying power increased 2.4% year-over-year, with four California cities—Los Angeles, San Diego, San Jose, and San Francisco—having seen the largest increases in affordability in February.
The Case-Shiller report stated that 19 of the top 20 markets reported lower price increases compared to the previous month, with only Tampa Bay, Florida, reporting an increase of 5.4%.
Las Vegas (0.7%) and Phoenix (6.7%) reported the highest year-over-year price increases. Markets with the largest setbacks were Seattle, San Francisco, and San Diego, reporting drops of 9.9 points, 8.7 points, and 6.5 points, respectively.
Home prices along the West Coast have taken a hit since 2014, with home-price growth falling from nearly 25% in February of 2014 to less than 5% in 2019.