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June home price reports signal stability through COVID-19 crisis

The S&P CoreLogic Case-Shiller National Home Price Index reported a 4.3% annual gain in June, flat from the previous month.

The level yearly increase in the national index, following similar consistency in May, signals price stability in the market, according to Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.

“Housing prices were stable in June. … More data will be required to understand whether the market resumes its previous path of accelerating prices, continues to decelerate, or remains stable,” Lazzara said. “That said, it’s important to bear in mind that deceleration is quite different from an environment in which prices actually fall.”

June’s year-over-year gain actually brought the national index to a new record high, continuing the upward momentum it has ridden since December 2018. Selma Hepp, CoreLogic’s deputy chief economist, said that the ongoing rise in the index underscores several factors that have helped keep the housing market resilient during the COVID-9 crisis.

“The strength of the Case-Shiller index reflects an ideal confluence of demographic and home buying fundamentals which keep driving home prices higher,” she explained. “On one hand, there’s a very limited supply of homes. And on the other, a strong millennial demand driven by record-low mortgage rates and a need for more space.”

Meanwhile, the smaller 10- and 20-City Composite Indices showed signs of deceleration in the nation’s largest cities. The smaller 10-City Composite Index, made up of the country’s 10 largest markets, logged an annual gain of 2.8%, down from 3.0% in May. The 20-City Composite Index’s year-over-year gain came in at 3.5%, down from 3.6% in the previous month.

S&P noted that, as has been the case since March, data was only available for 19 cities in the 20-City Composite, as data reporting lagged in the Detroit metro area due to impacts from COVID-19. Of the 19 cities that had available figures, all saw prices increase year over year, accelerating annually in five. 

Phoenix continues to report the highest year-over-year gains, with prices rising 9.0% annually. Seattle was second with a 6.5% increase, followed by Tamp at 5.9% growth.

Month over month, the national index logged a 0.6% unadjusted increase in June, while the 10 and 20-City Composites saw gains of 0.1% and 0.2% respectively before seasonal adjustment. Taking seasonality into account, the national index posted a monthly increase of 0.2%, while the 10-City Composite dropped 0.1% and the 20-City Composite was flat.

The June home price figures from the Federal Housing Finance Agency (FHFA), which were released on the same day as CoreLogic’s report, indicated similar stability. The FHFA’s House Price Index rose 5.4% year over year and 0.9% (seasonally adjusted) month over month. The FHFA’s data showed less moderation during June than the Case-Shiller Index did; per the FHFA, June’s annual gain was up compared to May’s 4.9% yearly growth.

Lynn Fisher, deputy director of the Division of Research and Statistics at the FHFA, observed that prices bounced back in June despite the impacts of COVID-19 as many areas of the country continued to re-open. 

“Although house prices fell slightly in May relative to April, in June prices rebounded by 0.9 percent over the month as local economies re-opened and transactions picked up again,” she said. “Four Census Divisions showed strong early summer gains with month-over-month growth of one percent or more in June.”

Per the FHFA, home prices have now increased for 36 straight quarters, since September 2011. Home prices rose annually in the second quarter in all 50 states, with Idaho leading the nation in annual appreciation at 10.8%. Idaho has now led the country in price growth for the last seven quarters.     

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