First Broad-Based Decline in Home Price Growth Since Feb 2008

The S&P Dow Jones Case-Shiller Home Price Indices for June confirm what reports from earlier months have indicated, that there is a sustained slowdown in home price increases.  June data indicate that the slowdown is also nationwide, affecting every one of the 20 cities tracked.

The National Index, which has been reported quarterly but will now be published monthly, gained 6.2 percent in the 12 months that ended in June.  Both the 10-City and the 20-City Composite Indices were up 8.1 percent on a year over year basis, but all three measures were considerably lower than in May and every city saw its rate of price increase worsen on an annual basis.

The National Index was up 0.9 percent in June; it had increased by 1.1 percent from April to May.  The twenty city composites each increased by 1.0 percent compared to 1.1 percent for the 10-City and 1.2 percent for the 20-City the previous month. 

"Home price gains continue to ease as they have since last fall," David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices said. "For the first time since February 2008, all cities showed lower annual rates than the previous month. Other housing indicators - starts, existing home sales and builders' sentiment - are positive. Taken together, these point to a more normal housing sector."

All 20 cities saw their year-over-year rates weaken in June. For the second consecutive month, San Francisco saw its rate decelerate by almost three percentage points - from 18.4 percent in April to 12.9 percent in June. Phoenix showed its smallest year-over-year gain since March 2012, 6.9 percent.   Cleveland showed a marginal increase of 0.8 percent over the last 12 months while Las Vegas led with a gain of 15.2 percent.

Monthly price gains remain strong with all 20 cities reporting a third consecutive month of price increases and for 19 of them (New York being the exception due to a slight dip in March) the fourth in a row. Five cities - Detroit, Las Vegas, New York, Phoenix and San Diego - posted larger gains in June than in May. Dallas and Denver continue to set new price peaks while Detroit remains the only city below its January 2000 value. 

New York had the strongest monthly increase at 1.6 percent, the largest since June 2013.  Chicago, Detroit, and Las Vegas all posted increases of 1.4 percent; for Las Vegas this was the largest monthly gain since last summer.   It was the eighth consecutive increase for San Francisco but at 0.3 percent the smallest since February.

"The monthly National Index rose 0.9 percent in June," Blitzer said.  "While all 20 cities saw higher home prices over the last 12 months, all experienced slower gains. In San Francisco, the pace of price increases halved since late last summer. The Sun Belt cities - Las Vegas, Phoenix, Miami and Tampa - all remain a third or more below their peak prices set almost a decade ago."

Prices as of June on the National Index are back to the levels they experienced in the spring of 2005.  The 10- and 20-City Indices show average home prices back to the fall 2004 levels.  Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 17 percent. The recovery from the March 2012 lows is 27.8 and 28.5 percent for the 10-City and 20-City Composites.

Blitzer said, "Bargain basement mortgage rates won't continue forever; recent improvements in the labor markets and comments from Fed chair Janet Yellen and others hint that interest rates could rise as soon as the first quarter of 2015. Rising mortgage rates won't send housing into a tailspin, but will further dampen price gains."

The S&P/Case-Shiller Home Price Indices are constructed to track the price path of typical single-family homes located in each metropolitan area provided. Each index combines matched price pairs for thousands of individual houses from the available universe of arms-length sales data. The S&P/Case-Shiller National U.S. Home Price Index tracks the value of single-family housing within the United States. The index is a composite of single-family home price indices for the nine U.S. Census divisions. The S&P/Case-Shiller 10- and 20-City Composites are value- weighted averages of relevant metro area indices. The indices have a base value of 100 in January 2000; thus, for example, a current index value of 150 translates to a 50 percent appreciation rate since January 2000 for a typical home located within the subject market.