- by New Deal democrat
Yesterday the existing home sales report showed continued deceleration in YoY price increases to 1.3%, along with an increase in inventory of houses for sale, indicative of the ongoing rebalancing of the housing market. This morning’s repeat home sales reports from the FHFA and S&P Case Shiller strongly confirmed that deceleration and ongoing rebalancing.
On a seasonally adjusted basis, in the three month average through April, both the Case-Shiller national index (light blue in the graphs below) as well as the FHFA purchase only index (dark blue) showed a declines of -0.4%, the steepest such declines since the summer of 2023:
On a YoY basis, price gains in both indexes not only continued to decelerate, at 2.7% for the Case Shiller index, and 3.0% for the FHFA index; but these were the lowest YoY% increases since 2012 for both indexes excluding 7 months in 2023 for the Case Shiller index:
These are of a piece with yesterday’s very low YoY% gains in prices in the existing home sales report:
(Graph by Calculated Risk)
Further, because house prices lead the measure of shelter inflation in the CPI, specifically Owners Equivalent Rent by 12-18 months, here is the same graph as above (/2 for scale) plus Owners’ Equivalent Rent from the CPI YoY (red):
As I wrote last month, the last time the Case-Shiller and FHFA Indexes were in this range YoY (2019), Owners Equivalent rent gradually declined in the 12-24 months thereafter to the +2% YoY level.
All of this is good news, showing that the existing vs. new homes market is well on its way to rebalancing, and that we can expect further good news in the very large shelter component of the CPI in the months ahead; with the sole - significant - exception of the effects of tariffs.
