US Home Prices Continue Record Steep Climb Up (S&P Case-Shiller)

The U.S. home price reports revealed big June gains that extended the streak of outsized increases to 13 months, as the S&P Case Shiller index rose 2.0%, while the FHFA home price index rose 1.6%, leaving respective all-time high y/y gains of 19.1% and 18.8%.

Home prices continue to soar, while supply constraints have capped growth in new and existing home sales, with big pull-backs through Q2 from unsustainable highs through the winter months. Soaring prices suggest that home demand isn’t abating, despite the weaker sales figures. We may well see a sales rebound again this winter as seasonal adjustment factors become more supportive, while builders continue to scramble to find building materials, workers, and buildable land.

  • The S&P Case-Shiller home price index surged 2.0% in June, leaving an all-time high y/y gain of 19.1%, following a prior y/y high of 17.1% (was 17.0%) in May that was last seen in 2004.
  • The FHFA home price index rose 1.6% in June to leave a record 18.8% y/y gain, after two prior records of 18.1% (was 18.0%) y/y in May and 15.9% (was 15.8%) y/y in April.
  • The S&P Case-Shiller 1 month chart shows a complete breakthrough of both the trend lines and R2.

Bottom Line

The home sales and construction data have climbed by less than expected through the March-July home buying season, thanks to inflation, shortages of construction materials, labor, and buildable land, leaving a big gap between supply and demand. The result has been a massive home price climb that will likely continue until we face a better supply-demand balance, likely in 2022.  Looking at the 1970s when inflation was rising, real estate increased over 300% in a 10 year period. We could be looking at a similar trend if rising inflation is not stopped.

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S&P Case-Shiller
S&P Case-Shiller

The S&P Case-Shiller

The S&P Case-Shiller home price index rose 2.0% to 268.2 in June for the 20-City measure, beating estimates, following the three largest gains since May of 2013 of 2.1% in May, 2.2% in April and 2.2% in March. The S&P measure hasn’t declined since January of 2019.

On a 12-month basis, the index posted an all-time high y/y gain of 19.1%, versus a high of 17.1% (was 17.0%) in May that was previously seen in 2004, and a 16-year high of 15.0% in April. Prices have been on the rise via the y/y metric since June of 2012.

abs-adviso-reportr

The 10-City composite increased 1.8% in June to 280.9, following May’s 1.9% increase to 275.9 (was 275.5). It’s up 18.5% y/y, versus 16.6% (was 16.4%) y/y in May.

Again all 20-cities measured posted double digit y/y gains, led by Phoenix (29.3% y/y), with Chicago (13.3%) bringing up the rear. Boston joined Charlotte, Cleveland, Dallas, Denver, and Seattle in registering all-time high 12-month gains.

The FHFA Home Price Index

The FHFA home price index rose by a hefty 1.6% to 343.3 in June, after May’s 1.8% (was 1.7%) increase to 337.8 (was 337.4). Prices are up 18.8% y/y, leaving an all-time high for that metric, versus prior all-time highs of 18.1% (was 18.0%) y/y in May and 15.9% (was 15.8%) y/y in April.

This home price index has risen by at least 1.1% in each of the past 13 months, and prices have risen for 40 consecutive quarters. The index has posted monthly gains since January of 2017, with the exception of a small dip in May of 2020.

ABS REPORT

It was again the case that all of the 9 census regions posted monthly increases, ranging from 2.6% in the Mountain states to 0.8% in the West North Central. For Q2, house prices increased 17.4% y/y, and rose 4.9% versus Q1. House prices have risen for 40 straight quarters, since September 2011, and home prices increased in all 50 state and the District of Columbia in Q2 y/y.

For Q2, house prices were up 17.6% y/y, leaving the largest quarterly gain on record, following prior record-large gains in both Q1 and Q4.

 

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