April 10, 2023

Home Prices Hanging in There, Demand Still Strong

The National Case-Schiller Home Price Index, which is considered one of the most accurate gauges for home price appreciation, showed that home prices fell 0.5% in January on a non-seasonally adjusted basis. When we take into consideration the normal softness we see during this time of year and seasonal adjustments that are made, home prices are only down 0.2%. Year over year, home prices are up 3.8%. And contrary to what the media has been reporting, home prices have come down 3% since their peak in June of 2022. This is definitely a far cry from a housing bubble.

Additionally, the Federal Housing Finance Agency (FHFA) released their House Price Index, which measures home price appreciation on single-family homes with conforming loan amounts. This is a bit different from Case Shiller as it does not include cash buyers or jumbo loans. This report showed that prices rose by 0.2% in January. Year over year, home prices are up 5.3%. The FHFA also reported that home prices are down 0.63% from their peak which means they’re flat.

When we look at both reports, we can see that the decline in Case Shiller is more than likely coming from 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 at 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, nationally home prices are still strong as is the demand for housing.


By: Jon Iacono
A Family

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