Home prices rose just 0.8% in April, but the rate of inflation outpaced growth, marking the 11th straight month of declines in real terms, according to Case-Shiller data.
According to the S&P Kotality Case-Shiller National Home Price Index, U.S. home prices rose only 0.8% in April compared to the same month last year. Although this number sounds like growth, it acts like stagnation when you factor in inflation.
That’s because home values fell for the 11th straight month in real terms in April, and inflation, at 3.8%, outpaced nominal price growth by about 3 percentage points. The national index rose slightly from March’s annual rate of 0.7%, with the period of housing stalling rather than building wealth expanding.
Strict price division by region
Regional divisions tell a clearer story. Chicago had the highest annual growth rate of 6.5% among the 20 cities surveyed, followed by New York at 3.8% and Cleveland at 3.2%.
Seattle had the worst year-over-year decline of 2.3%, while Denver, Tampa, Dallas, and Phoenix all recorded declines of 1.6% to 1.9%.
That’s a nearly 9 percentage point difference between the best and worst performing subways in a month, making this difference the norm rather than the exception.
“Geographic diversification remains significant,” said Nicholas Godek, head of fixed income trading and products at S&P Dow Jones Indices. “While the Midwest and Northeast markets continue to experience modest growth, many Sunbelt and Western metros continue to see declines.”
This pattern holds true across a broader range of composite materials.
The 10-city composite rose 1.8% annually, up from 1.5% in March, and the 20-city composite rose 1.1% from 0.9%. Both remain well below the pace needed to outpace inflation.
Depending on which adjustment you’re reading, things get murkier each month. On a seasonally unadjusted basis, the national index rose 0.8% from March, reflecting the market’s typical spring rebound.
However, when seasonal effects are removed, the national index actually fell by 0.1%, while the 20-city composite index was almost flat at -0.04%.
Godec pointed to the six-month trend as a more useful signal. There was a 1.35% increase nationally in the past six months, offsetting a 0.5% decline in the previous six months.
“This represents a gradual turnaround, but remains limited given rising costs,” Godek said.
Rising interest rates will suppress price increases
Mortgage rates play a big role in keeping their changes modest.
Godek said 30-year interest rates rose to 6.3% in April after falling below 6% at the beginning of the year, and that even in a market with real demand, financing costs have risen enough to keep prices from rising.
“In this high interest rate environment, house price growth remains subdued, with house prices largely stuck in nominal terms and falling in real terms,” Godek said.
Prices actually fell 0.1% month over month in April, but were still up 2% year over year, according to a separate release from the Federal Housing Finance Agency using purchase-only data from Fannie Mae and Freddie Mac.
The FHFA data showed even wider regional divisions than the Case-Shiller data.
Seasonally adjusted monthly percentage changes ranged from -0.8% in the Mountains to +1.0% in New England, and 12-month changes ranged from +0.2% in the Pacific to +4.4% in the Northeast Central region.
FHFA’s next report will cover May data and is scheduled to be released on July 28.
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