House Prices Ten Years After the Peak


The S&P CoreLogic Case-Shiller (CS) US Home Price Indices for December were released today. The national index reached a new high for the month of December and the fourth quarter, but trailed slightly in 2016 overall. The annual average in 2006 was 183.45, slightly ahead of 181.34 in 2016.

The annual pace of house price appreciation reaccelerated to 5.2% in 2016 after decelerating from a post-crash high of 9.6% in 2013 to 4.6% in 2015. While the monthly numbers are volatile, the general trend in house prices has followed the rise in existing home sales since the downturn. Absent notable perturbations in sales related to home buyer tax credits, interest rate scares and mortgage lending hiccups, house prices have moved up steadily with sales.

In fact, since 2012 the pace of growth in the CS national home price index has been highly correlated with the pace of existing home sales in the prior two quarters. The strong price growth in the fourth quarter reflects brisk sales in the second quarter of the year, and a slowdown in third quarter sales points to a deceleration in house price appreciation in the current quarter, probably not a bad thing after a bumpy ride through the last couple of years.



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