Recently released data by the Federal Housing Finance Agency (FHFA) shows that its measure of house prices, House Price Index – Purchase Only, rose by 4.3% on a 12-month seasonally adjusted basis in September 2014. This marks the 32^nd consecutive month of year-over-year growth. Over this period of more than two-and-a-half years, house prices have risen by 17.4% and are now approaching their August 2005 level.

Similarly, data released by Standard and Poor’s (S&P) and Case-Shiller indicates that its measure of house prices, the House Price Index – National, rose by 4.8% on a year-over-year seasonally adjusted basis. This is the 29^th consecutive month of year-over-year increases in the house price index. Over this period of more than two years, house prices have risen by 18.8%. The S&P/Case-Shiller House Price Index is now approaching its March 2005 level.

According to S&P/Case-Shiller National House Price Index, year-over-year house price growth has been slowing in recent months. In each month between January 2012 and October 2013, the 12-month change in house prices was higher than the previous month. Year-over-year house price growth peaked at 10.9% in October 2013. However, as Figure 1 below illustrates, since that time, year-over-year house price growth has slowed.

Nationally, year-over-year house price growth is currently 4.8%, 6.1 percentage points less than the 10.9% recorded in October 2013. In every city for which data is available from S&P/Case-Shiller, the year-over-year house price growth recorded in September 2014, the latest month available, is less than the highest rate of growth recorded when house prices nationwide were accelerating. Moreover, cities where the year-over-year house price growth was greatest during the January 2012 to October 2013 period, have recorded year-over-year growth in September 2014 that is typically farthest from that peak rate.

Figure 2 illustrates these results. The horizontal axis represents the highest year-over-year growth rate between January 2012 and October 2013 for the 20 cities followed by S&P/Case-Shiller. The vertical axis plots the difference between the highest growth rate when house prices were accelerating nationwide and the 12-month growth rate recorded in the current month, September 2014. As the chart illustrates, cities such as Phoenix and Las Vegas saw their prices soar between January 2012 and October 2013, but house price growth in these cities has since slowed markedly. In Phoenix, year-over-year house price growth peaked at 23% in January 2013, but is 3% in September 2014, 20 percentage points less than its peak. Similarly, year-over-year house price growth in Las Vegas peaked at 29% in August 2013, but was 9% in September 2014, 20 percentage points less than its peak.

For full histories of the composites and 20 markets included in the Case-Shiller composites, click here cs.

For full histories of the FHFA US and 9 Census divisions, click here fhfa.

Tags: economics, home building, house prices, housing