Case-Shiller Index shows home price gains slowing down in Aug.

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The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported a 5.8% annual gain in August, down from 6.0% in July, S&P Dow Jones Indices reported on Tuesday. The data shows that home prices continued their rise across the country over the last 12 months.

The annual gains fell below 6% for the first time in 12 months. Economists surveyed by IFR Markets had expected a gain of 5.9% in August.

“Following reports that home sales are flat to down, price gains are beginning to moderate,” David Blitzer, managing director at S&PDJI said. “Comparing prices to their levels a year earlier, 14 of the 20 cities, the national index plus the 10-city and 20-city composite indices all show slower price growth. ... Other housing data tell a similar story: prices and sales of new single family homes are weakening, housing starts are mixed and residential fixed investment is down in the last three quarters. Rising prices may be pricing some potential home buyers out of the market, especially when combined with mortgage rates approaching 5% for 30-year fixed rate loans."
The 10 city composite annual increase fell to 5.1% from 5.5% in July while the 20 city composite posted a 5.5% year-over-year gain in August, down from 5.9% in the previous month.

Among the 20 cities, Las Vegas, Seattle and San Francisco continued to report the highest year-over-year price gains. In August, Las Vegas led the way with a 13.9% year-over-year price increase, followed by San Francisco with a 10.6% increase and Seattle with a 9.6% gain.

Before seasonal adjustment, the national index posted a month-over-month gain of 0.2% in August while the 10 and 20 city composites did not report any gains for the month.

After seasonal adjustment, the national index showed a 0.6% month-over-month increase in August while the 10 city composite and the 20 city composite indexes both rose 0.1% month-over-month.

“There are no signs that the current weakness will become a repeat of the crisis, however. In 2006, when home prices peaked and then tumbled, mortgage default rates bottomed out and started a three year surge,” Blitzer said. “Today, the mortgage default rates reported by the S&P/Experian Consumer Credit Default Indices are stable. Without a collapse in housing finance like the one seen 12 years ago, a crash in home prices is unlikely.”

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