Home prices continued to creep up at a modest pace in February with 4% gain compared to February 2018, down from 4.2% annual growth in January.
Key Takeaways
- The 10-city composite grew 2.6% on an annual basis, down from 3.1% the month prior.
- The 20-city composite was also down, sinking from 3.5% in January to 3% in February.
- February growth was below expectations of a 0.3% rise. January growth was down -0.2% from December.
The S&P CoreLogic Case Shiller home price index registered 4% growth compared to 4.5% expected in February, with a growth cooldown in both the 10 and 2-city composite indices. Home prices in Las Vegas, Phoenix, and Tampa are still gaining, registering the highest gains among the 20 cities. Las Vegas home prices rose 9.7%, Phoenix homes gained 6.7%, and Tampa gains were 5.4%.
Home prices have been on the rise since 2012, but recently growth has slowed down. Four interest rate hikes in 2018 impacted affordability, making mortgages a daunting prospect for many would-be buyers. The trade war has also made building materials more expensive.
San Francisco saw home prices fall annually for the first time since 2012 in March, with prices rising above historic affordability levels before then.
Home price appreciation is slowing at an alarming rate based on Case-Shiller data pic.twitter.com/YVUtpiIta5
— Robert Burgess (@BobOnMarkets) April 30, 2019
Expert Outlook
“Home sales drifted down over the last year except for a one-month pop in February 2019. Sales of new homes, housing starts, and residential investment had similar weak trajectories over the last year,” said David Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.
“Last year, the largest gain was 12.7% in Seattle. Regional patterns are shifting. The three California cities of Los Angeles, San Francisco and San Diego have the three slowest price increases over the last year. Chicago, New York and Cleveland saw only slightly larger prices increases than California. Prices generally rose faster in inland cities than on either the coasts or the Great Lakes.”
Market Reaction
Spot gold is up 0.35% on the day, last trading at $1,283.10/oz with a high of $1,286.18/oz and a low of $1,278.96/oz. The housing market has been struggling in recent years with wage gains only recently outpacing growth in home prices. While the drop in home prices will appeal to new buyers, excessive depreciation would impact the economy in a number of other ways, and the recent report may be influencing traders to invest in gold in the short-term pending further insights into the market.
Gold Price Chart
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