- by New Deal democrat
Three housing metrics have been reported between yesterday and today. Yesterday Apartment List updated their National Rent Report, and today the two national repeat home sales indexes, from the FHFA and Case-Shiller, were updated through February. To cut to the chase, all three confirm that housing prices have ceased being an engine of inflation.
The Case-Shiller National index (blue in the graphs below) increased 0.1% for the three month period ending in February, while the FHFA index (red) was unchanged:
Just as important if not moreso is that the YoY comparisons of at least one of the two national indexes continued to show further disinflation. While the FHFA Index increased 1.7% YoY, a 0.1% YoY increase from January’s 14 year low, the Case Shiller national index increased only 0.7% YoY, the lowest since the Great Recession’s housing bust except for April through June 2023:
As per usual, since housing prices lead the CPI’s shelter component by roughly 12-18 months, let’s compare the YoY trends (Note: house price indexes /2.5 for scale):
Last month I wrote that the repeat sales indexes provided “solid evidence that we can expect shelter inflation in the CPI to continue to decelerate throughout this year …. with the shelter component ending this year at close to a 2.0% YoY increase.” Since then, the CPI report for March indicated a continued 3.0% increase; but there is every reason to expect continued disinflation.
That disinflation in shelter costs was reinforced by yesterday’s National Rent Report, which indicated that new apartment rents declined -1.7% YoY:
I should note that the BLS’s “New-“ and “All Tenants Rent Index” which were last updated in January for Q3 of last year, have been “temporarily suspended” due to last autumn’s government shutdown, which apparently affected their collection and measurement procedures. This is a shame because those indexes have been developing a good record for forecasting the trend in rents in the CPI.
But the bottom line is that all of the three reports indicate that the purchase price of an existing home, as well as rent, are providing no or at worst very limited upward pressure on shelter inflation.