Repeat home sales through March confirm continued deceleration of price increases
– by New Deal democrat
Last week the existing home sales report showed continued deceleration in YoY price increases to 1.8%, indicative of the ongoing rebalancing of the housing market. This morning’s repeat home sales reports from the FHFA and S&P Case Shiller confirmed that deceleration and ongoing rebalancing.
On a seasonally adjusted basis, in the three month average through March, the Case-Shiller national index (light blue in the graphs below), showed a declne of -0.3%, and the somewhat more leading FHFA purchase only index (dark blue) declined -0.1%. These monthly changes were the lowest since late 2022 [Note: FRED hasn’t updated the FHFA data yet]:
On a YoY basis, price gains in both indexes also showed continued deceleration, as the Case Shiller index declined -0.5% YoY to a 3.4% gain, and the FHFA index declined by -0.4% YoY to a 3.5% YoY increase:
Because house prices lead the measure of shelter inflation in the CPI, specifically Owners Equivalent Rent by 12-18 months, the above graph also shows that measure of shelter inflation (red, *2.5 for scale). The FHFA and Case Shiller reports this month adds to the evidence that OER will trend gradually towards roughly a 3.5% – or even 3.0% – YoY increase in the months ahead. Indeed, the last time the Case-Shiller and FHFA Indexes were in this range YoY (2019) (not shown), Owners Equivalent rent gradually declined in the 12-24 months thereafter to the +2% YoY level (5% in 2021 as shown in graph)
Last month I noted that the most leading rent index, the Fed’s experimental all new rental index (not shown), showed a median YoY *decrease* in new apartment rents of -2.2% YoY, with all rents including existing rentals increasing at a rate of +3.3% YoY in Q1. So this morning’s repeat home sales price reports were in line with that good report as well.
The only bad news is that as a result Tariff-palooza!!, interest rates including mortgage rates have moved higher:
In fact on Friday, the daily update showed mortgage rates back slightly over 7%. Which suggests that part of the ongoing deceleration in home price increases is likely to be demand destruction.
“Repeat home sales confirm deceleration of prices for existing homes,” Angry Bear” by New Deal democrat