- by New Deal democrat
Despite the government shutdown, the FHFA did publish its repeat home sales index this morning. And since the S&P Case Shiller index is from a private entity, that was published as well. Between those two and the NAR’s existing home sales report, we still have pretty good visibility into that 90% of the housing market, although we have to infer what it means for new home sales and construction.
The last several months showed absolute *de*flation in home prices. The message was mixed for this morning’s reports through August, in which the Case Shiller National Index (gray in the graphs below) declined another -0.3% (non-seasonally; on a seasonally adjusted basis they rose 0.2%), but the FHFA purchase only index (blue) rose 0.4% (note: FRED hasn’t updated either series yet, so the below graphs are through last month. When they update, so will I) (now updated with current Case-Shiller information):
On a YoY basis, price gains in the Case Shiller index continued to decelerate, at 1.5%, while the YoY change in the FHFA Index remained at 2.3%. These remain the lowest YoY% increases since 2012 for both indexes excluding 5 months in 2023 for the Case Shiller index:
With the gain this month, the actual *de*flation in the house price indexes from peak has been reduced to -0.1% for the FHFA Index, while the Case Shiller Index is down -0.9%. The peak for the FHFA index (blue in the graphs below) was in March, while that the Case-Shiller Index (gray) was in February:
Because house prices lead the shelter component of the CPI by 12 - 18 months, this also suggests that they will continue to decelerate, at least slowly, over that period. Here is the same graph as above (/2.5 for scale) plus Owners’ Equivalent Rent from the CPI YoY (red):
The last time the Case-Shiller and FHFA Indexes were in this range, excluding the Great Recession, was in the 1990s, during which time Owners Equivalent rent was in the 2.5%-3.5% range (vs. 3.8% as of the most recent CPI report, which was also the lowest reading of that number since autumn of 2021).
When available, I’ve been comparing these numbers to the latest “National Rent Report” from Apartment List, but that has not been released yet for September. On the other hand,
via Nick Gerli, a similar metric from RealPage also shows an actual decline in rents in Q3 of this year, and are also negative YoY, likely (he says) driven by a slowdown in job growth and a decline (or outright reversal?) in immigration:
For the last two months, my conclusion has been that all phases of the housing market are either at or near their low points (sales, permits, starts), or declining (prices, construction, employment, and new spec units for sale). For over a decade I have said that sales lead prices, and the available information this month indicates that it is still the case, with the housing market is still flat on its back, with stagnant - but not necessarily declining - sales, and continuing declines in prices at least.
