The Case-Shiller (CS) National Home Price Index, reported by S&P Dow Jones Indices, continued its upward trend in June. The index rose at a 2.5% seasonally adjusted annual pace, faster than the 1.6% in May.
House prices declined at the fastest pace in late 2008 as the housing bust approached its trough. Most of the time between 2007 and 2011, the annual growth rate of home prices remained below zero. It turned negative to positive in 2012 and 2013 as the housing recovery gained momentum. The average annual growth rate of home prices in 2014 and 2015 was 4.9%, faster than the 2.9% average increase in the first half of 2016. The relative stability in the trend recently represents a housing market settling back toward long term sustainable growth rates.
The Home Price Index from the Federal Housing Finance Agency (FHFA) rose at a seasonally adjusted annual rate of 2.3% in June, slower than 3.0% in May. Despite the monthly volatility both indexes have kept climbing up since 2012. Figure 2 shows the FHFA and S&P/Case-Shiller price index levels from 1991 to 2015. The trend lines (dashed) indicate that both home prices are growing steadily and returning to their long term trend path.