Barrington Homebuyers: October Case-Shiller Results and November Forecast: Phoenix Replaces Seattle Among Top Three Home-Price Gainers

Wednesday, December 26, 2018

October Case-Shiller Results and November Forecast: Phoenix Replaces Seattle Among Top Three Home-Price Gainers

The U.S. National S&P CoreLogic Case-Shiller Home Price Index - which tracks home prices - rose 5.5 percent in October from a year earlier, a hair above Zillow's forecast last month.
The S&P CoreLogic Case-Shiller 20-city index climbed 5 percent annually in October, while the 10-city index rose 4.7 percent.
Zillow forecasts a steady 5.5 percent annual gain for November.

Home prices were steady in October, gaining 5.5 percent year-over-year, the same as September, according to the Case-Shiller home price index. The gain was slightly above Zillow’s forecast, and we expect another 5.5 percent year-over-year increase in November.

Las Vegas led the 20-city index with an annual gain of 12.8 percent. San Francisco was next, posting a 7.9 percent year-over-year gain. And Phoenix replaced Seattle in the top three gainers, climbing 7.7 percent year-over-year in October.

The housing market slowdown that began in the second half of 2018 sets up a mixed bag for home buyers and sellers as we look at an uncertain 2019. Slowing home price appreciation can be read by many as an ominous sign – a kind of canary in the coal mine – for a more general downturn to come, but it's not necessarily an indicator that the sky is falling.

In fact, this slowdown could turn out to be more of a present for the market than a penalty. Would-be sellers that have ridden appreciation up over the past few years may choose to sell and capitalize on their recent gains as that upward ride slows – which will undoubtedly benefit buyers frustrated for years by limited inventory. And buyers themselves may find themselves with time to catch their breath and save for a home appropriate for them, rather than feeling like they're trying to hit a rapidly moving target in the face of faster appreciation.

There are tradeoffs, of course. If and when more sellers come out of the woodwork, the currently fierce competition among buyers may shift to sellers – a shift that has materialized more quickly than was anticipated at the start of this year. Listings with price cuts and longer time on market – already both growing – may become even more frequent. For the time being, this slowdown represents a return to fundamentals more than anything else, and to more balance between buyers and sellers.