The 20-city index, which examines 20 of the main metropolitan areas, was a bit weaker. From the peak of home prices in June of 2022, we see national home prices were down 4.4%. But, again after seasonal adjustments are made, they are only down 2.7%. The 20-city index was down 6.2% and 4.7% respectively. This showed that some of the areas like San Francisco and Seattle, which had some of the biggest gains in appreciation, are giving back more with the prices softening. It’s also worth noting that when you remove some of the bigger cities, much of the nation is pretty flat.
Another key report on home price appreciation was released as well. The FHFA (Federal Housing Finance Agency) released its House Price Index. This measures home price appreciation on single-family homes with conforming loan amounts. It does differ from Case-Shiller as it does not include cash buyers or jumbo loans. The report showed that home prices were down 0.7% in December and only down 0.1% after the seasonal adjustments.
When you compare FHFA to Case Shiller, you can see that the decline in Case Shiller is coming from much higher-priced homes where there is less demand. Again, Case Shiller also includes cash buyers. There are likely cash discounts being offered and, in these transactions, buyers paying in cash are typically able to command a lower price. This more than likely accounts for why Case Shiller is lower.
We feel that the seasonal adjustments in these reports do a much better job of removing the strength in home pricing we see during the busier months while also removing some of the weaknesses we see during the slower months. When this is done correctly, it gives you the ability to see the true trend over time. Their non-seasonally adjusted numbers and seasonally adjusted numbers do match up on a year-over-year basis. There is still demand in the housing market and while some areas are cooling more than others, national home prices are still strong as is the demand for housing.
Sources:
http://bit.ly/3gPEafo
http://bit.ly/3f4R6fl
