The Case Shiller Home Price Index, which is one of the industry’s best gauges of home price appreciation, showed that home prices rose 0.5% in the month of April. This is after rising 0.4% in March. It appears that home prices have hit a bottom and are on the rise. Year over year, home prices are down 0.3%. Home prices rose sharply in the first half of 2022, so when compared to 2023 and combined with the fact that they are currently rising, they are still slightly lower than where they were this month in 2022. Since home prices seemed to settle more towards the second half of 2022, and are now up around 3% so far for the first four months this year, there is reason to believe that home prices will finish the year up 5% to 6%. From the peak in June of 2022, home prices have only come down 1.8%. This amount off the peak is a far cry from a housing bubble and home prices are turning around.
Another important report that was released was the Federal Housing Finance Agency’s House Price Index. This report differs from Case Shiller because it measures home price appreciation on only single-family homes with conforming loan amounts and doesn’t take into account cash purchases. The FHFA saw home prices rise 0.7% in April after rising 0.5% in March and 3.1% year over year. Home prices via this report are 1.6% higher than the peak in June of 2022!
The slight decline from the peak in home pricing that is shown in Case Shiller is coming from higher-priced homes, which is where there is less demand. Also, within the Case Shiller index, there are cash buyers who sometimes are able to negotiate a lower purchase price due to the cash purchase incentive.
On top of Case Shiller and FHFA showing big increases, there are other sources that are also showing an acceleration in home price appreciation as well. For April, CoreLogic reported a 1.2% increase, Black Knight showed a 0.5% increase, and Zillow showed a 1.4% increase for April.
As you can see, there are at least five well-known sources of home price appreciation that are all showing a trend of increasing home price appreciation. While this can be challenging for home buyers, it is undeniably showing the strength and opportunity in the housing market.
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By: Jon Iacono