Existing Home Sales vs. Home Prices

The Federal Housing Finance Agency (FHFA) and the Standard and Poor’s/Case-Shiller (CS) recently released their respective home price indexes for July.

The FHFA index shows house price appreciation accelerated to a seasonally adjusted annual rate of 7.3% in July. The CS index shows house prices rose at an annual growth rate of 4.6% in July.

Both indexes have been rising since the housing market stabilized in late 2011-early 2012. Recent moves in the indexes strongly reflect activity in existing home sales. Accelerating sales put upward pressure on prices, declining sales put downward pressure on prices.

The CS index has two notable flat spots, the first in early 2014 associated with the sharp slowdown in existing home sales in the second half of 2013 in response to a spike in interest rates. The second in early 2015 as price pressures eased following declining sales during the harsh winter weather. In both cases those plateaus were followed by renewed price increases as existing home sales reaccelerated.

Figure1_July



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