May Case-Shiller Results and June Forecast: Still Tapping on the Brakes

• Home prices were up 3.4% year-over-year in May, a slowdown from 3.5% the previous month.
• The 10-city composite rose 2.2% from last year, and the 20-city composite climbed 2.4% year-over-year.
• Las Vegas, Phoenix and Tampa posted the largest year-over-year gains among the 20 cities, growing 6.4%, 5.7% and 5.1% respectively.

Home prices continue to climb, but at a slower pace that amounts to normalization rather than full cooling. In May, which is well into home-buying season, prices slowed again, , according to Case-Shiller’s national home price index. They rose 3.4% year-over-year, below 3.5% growth in April, which itself marked a slowdown from March.

Only seven of the cities in Case-Shiller’s 20-city composite reported higher price increases for the year ending May 2019 compared to April 2019. Las Vegas, Phoenix and Tampa posted the largest year-over-year gains in that group, climbing 6.4%, 5.7% and 5.1% respectively. Seattle, which used to report white-hot price growth, fell by 1.2% year-over year. San Francisco gained just 1%.

Index	Zillow Forecast, Released 6/25/19	Actual Case-Shiller Indices, Released 7/29/19	Historical Median Absolute Error*
10-City Composite, Month-Over-Month (SA)	0.0%	0.1%	0.2%
10-City Composite, Year-Over-Year (NSA)	2.2%	2.2%	0.2%
20-City Composite, Month-Over-Month (SA)	0.0%	0.1%	0.2%
20-City Composite, Year-Over-Year (NSA)	2.4%	2.4%	0.1%
U.S. National Month-Over-Month (SA)	0.2%	0.2%	0.1%
U.S. National Year-Over-Year (NSA)	3.5%	3.4%	0.1%
*Calculation of Median Absolute Errors are based on Zillow’s monthly Case-Shiller forecasts. Zillow’s Case-Shiller 10- and 20-City Index forecasts date to 2011.  The national Case-Shiller forecasts began in 2014.

 

Thwarted by climbing prices for years, buyers are no longer willing to pay any price. There were too few homes on the market and buyers were unable to find houses that fit both their needs and their budgets, so they took a breather. The fact that buyers – and prices – slowed their roll right through the middle of home-buying season indicates just how few homes are on the market.

Low mortgage rates and consumer demand typically would create a bonanza for builders and the housing market overall. In recent years, builders have faced high land and labor costs that prevented them from putting up homes fast enough, particularly at the less expensive end of the market where first-time buyers search.

 

Index	Actual May Case-Shiller Change	Zillow’s June Case-Shiller Forecast
10-City Composite, Month-Over-Month (SA)	0.1%	-0.1%
10-City Composite, Year-Over-Year (NSA)	2.2%	2.0%
20-City Composite, Month-Over-Month (SA)	0.1%	0.0%
20-City Composite, Year-Over-Year (NSA)	2.4%	2.2%
U.S. National Month-Over-Month (SA)	0.2%	0.2%
U.S. National Year-Over-Year (NSA)	3.4%	3.4%
*Calculation of Median Absolute Errors are based on Zillow’s monthly Case-Shiller forecasts. Zillow’s Case-Shiller 10- and 20-City Index forecasts date to 2011.  The national Case-Shiller forecasts began in 2014.

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