Case-Shiller National Index Reveals Monthly Deceleration

The Case-Shiller House Price Index shows month-over-month price deceleration on a seasonally adjusted basis, suggesting that the market is slowing despite a continuation of record high prices. According to Bill McBride’s CalculatedRisk Newsletter, the Federal Housing Finance Agency is reporting an 18.5 percent YoY house price increase for the third quarter of 2021. 

Though prices are still on the rise, the housing market may have already reached its peak growth period, meaning a more stable environment for buyers in 2022. 

The MoM increase in Case-Shiller was at 1.18%; still historically high, but lower than the previous 13 months. House prices started increasing sharply in the Case-Shiller index in August 2020, so the last 14 months have all been historically very strong, but the peak MoM growth is behind us - and the year-over-price growth is starting to decelerate.

In the October existing home sales report, the NAR reported months-of-supply decreased to 2.4 months in October. There is a seasonal pattern to inventory, but this is still very low - and prices are increasing sharply.

My sense is the Case-Shiller National annual growth rate of 19.8% in August was probably the peak, and that YoY price increases will continue to slow in coming months. Still - since the normal level of inventory is probably in the 4 to 6 months range - we’d have to see a significant increase in inventory to sharply slow price increases, and that is why I’m focused on inventory!

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