Case-Shiller: Annual Appreciation Losing Momentum

Annual appreciation in February kept slowing, with gains grinding to 4 percent, according to the latest national S&P CoreLogic/Case-Shiller Indices. One month prior, appreciation was north of 4 percent, and in February of last year, 6.3 percent.

After hitting a peak in the recovery, appreciation has been losing momentum in recent years, and both new and preowned sales have struggled, says David M. Blitzer, chairman and managing director of the S&P Dow Jones Indices Index Committee.

“Homes began their climb in 2012 and accelerated until late 2013, when annual increases reached double digits,” Blitzer explains. “Subsequently, increases slowed until now, when the National Index is up 4 percent in the last 12 months. Sales of existing single-family homes have recovered since 2010 and reached their peak one year ago in Feb. 2018. Home sales drifted down over the last year, except for a one-month pop in Feb. 2019.

“Sales of new homes, housing starts and residential investment had similar weak trajectories over the last year,” adds Blitzer. In March, new-home sales sprouted up 4.5 percent, while starts tanked 14.2 percent, and existing-home sales tumbled 4.9 percent.

According to Ralph McLaughlin, deputy chief economist and executive of Research and Insights at CoreLogic, affordability issues in the largest markets are prompting the slowdown.

“Slowing U.S. home price growth has primarily been driven by affordability constraints in a few of our largest, most expensive housing markets,” says McLaughlin.

There are changes emerging, however, from a regional standpoint.

“Regional patterns are shifting,” Blitzer says. “The three California cities of Los Angeles, San Francisco and San Diego have the three slowest price increases over the last year. Chicago, New York and Cleveland saw only slightly larger prices increases than California. Prices generally rose faster in inland cities than on either the coasts or the Great Lakes. Aside from Las Vegas, Phoenix and Tampa, which saw the fastest gains, Atlanta, Denver and Minneapolis all saw prices rise more than 4 percent—twice the rate of inflation.”

“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,” McLaughlin says. “In places like San Diego, San Francisco and Los Angeles, the proverbial chickens will be coming home to roost this spring because they haven’t been able to find a decently affordable coop.”

The complete data for the 20 markets measured by S&P:

Atlanta, Ga.
MoM: 0.2%
YoY: 4.7%

Boston, Mass.
MoM: -0.4%
YoY: 3.2%

Charlotte, N.C.
MoM: -0.1%
YoY: 4.2%

Chicago, Ill.
MoM: 0%
YoY: 2.2%

Cleveland, Ohio
MoM: -0.3%
YoY: 2.8%

Dallas, Texas
MoM: 0.2%
YoY: 3.4%

Denver, Colo.
MoM: 0.9%
YoY: 4.7%

Detroit, Mich.
MoM: 0.1%
YoY: 4%

Las Vegas, Nev.
MoM: 0.3%
YoY: 9.7%

Los Angeles, Calif.
MoM: 0%
YoY: 1.8%

Miami, Fla.
MoM: 0.1%
YoY: 4.3%