United States: House price growth continues to slow to near two-year low in September
November 27, 2018
Home price growth continued on its six-month downward trend in September. The S&P/Case-Shiller 20-city composite home price index was flat again month-on-month in September, matching the reading logged in August. When adjusted for seasonal factors, house prices grew 0.3% from the previous month in September, up from August’s 0.1% and matching market expectations.
In annual terms, home price growth fell to a 22-month low in September, registering a 5.2% increase, down from 5.5% in August. As in previous months, price gains in West Coast cities remained far stronger than Midwestern and East Coast cities. Las Vegas, San Francisco and Seattle continued to register the largest year-on-year price increases. Overall, 16 out of the 20 cities in the index registered slower annual price growth in September.
House price growth is expected to continue softening in the months ahead due to lower demand, caused notably by a decline in housing affordability amid rising interest rates. As remarked by S&P Dow Jones Indices Managing Director David Blitzer:
“Sales of both new and existing single family homes peaked one year ago in November 2017. Sales of existing homes are down 9.3% from that peak. Housing starts are down 8.7% from November of last year. The National Association of Home Builders sentiment index dropped seven points to 60, its lowest level in two years. One factor contributing to the weaker housing market is the recent increase in mortgage rates. Currently the national average for a 30-year fixed rate loan is 4.9%, a full percentage point higher than a year ago.”
Author: Joffrey Simonet, Economist