Tuesday, July 01, 2014

The Slow Down in the House Price Indexes

by Bill McBride on 7/01/2014 02:10:00 PM

We are finally seeing the slowdown in the year-over-year (YoY) housing price indexes that many of us have been expecting based on supply and demand.  With inventory increasing steadily - and by one measure now above 2012 levels for the same week - the price slowdown will probably continue (and we may see price index declines in some areas).

Note: on inventory, the NAR data for May indicated inventory was up 6.0% YoY, but still down 7.6% compared to May 2012.  Comparing to 2012 is interesting because prices started to increase in early 2012 (my bottom call in February 2012: The Housing Bottom is Here).

As an example, the CoreLogic index released this morning showed an 8.8% YoY increase in May; a fairly large increase, but the smallest year-over-year increase since late 2012 - and down from a 11.8% YoY increase a few months ago.

This slowdown in the house price indexes (even though expected) is a key story for 2014.  The next question is how much prices will slow.  Zillow is forecasting their index will increase 2.9% over the next 12 months. This will be a key story for the rest of the year and in 2015.

Here is a table of several indexes through April and May.

Year-over-year change for selected House Price Indexes
Case Shiller1CoreLogicFHFA2ZillowBlack Knight3FNC
Jan-1413.2%11.4%7.3%6.3%8.0%9.1%
Feb-1412.9%11.8%6.9%5.6%7.6%9.2%
Mar-1412.3%11.0%6.4%5.7%7.0%9.1%
Apr-1410.8%10.0%5.9%5.3%6.4%8.4%
May-14---8.8%---5.3%------
1Case-Shiller Composite 20
2FHFA Purchase Only Index SA
3Black Knight formerly LPS

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