S&P Case-Shiller Index inches upward after months of slowing

The S&P CoreLogic Case-Shiller National Home Price Index held steady in December with an 18.8% year-over-year gain, unchanged from the previous month.

The index actually picked up a few fractions of a percentage point from November, inching upward from 18.79% annually to 18.84% to close the year. This increase, however infinitesimal, put a stop to three months of price deceleration amid various market headwinds. The 10- and 20-city composite indices, which track home-price growth in the country’s largest metro areas, also saw slight upticks, with the 10-city composite up 17% annually in December (up from 16.9% one month prior) and the 20-city composite at 18.6% yearly growth (up from 18.3% in November).

“This suggests that homebuyers have not yet thrown in the towel,” said Selma Hepp, deputy chief economist for CoreLogic. “On the contrary, the re-acceleration of annual home-price growth occurred in 15 of the 20 metro areas, with San Diego, Dallas, San Francisco, Miami and Charlotte … experiencing the largest pick-up in gains. The increase was also relatively stronger for higher-priced homes. Buyers may have been rushing in anticipation of higher rates, though most recent data suggests that demand remains vigorous despite the 100-basis-point increase in rates.”

With December’s figures bringing 2021 to a close, the 18.8% annual increase handily eclipsed 2020’s 10.4% rise and is the highest calendar-year gain in the 34 years that the S&P Case-Shiller Index has tracked home prices. Moreover, the yearly gain is the fifth-highest reading in the history of the national index.

The 20-city composite index’s year-over-year increase also marked a record high for a calendar year, while the 10-city index saw its second-largest annual calendar-year jump ever. At the city level, too, price growth remains robust, noted Craig J. Lazzara, managing director at S&P DJI.

“All 20 cities [in the 20-city composite] saw price increases in 2021, and prices in all 20 are at their all-time highs,” he said. “December’s price increase ranked in the top quintile of historical experience for 19 cities, and in the top decile for 16 of them.”

Phoenix, Tampa and Miami saw the largest yearly gains in December among these 20 cities. Phoenix continued to top all metros with a 32.5% annual increase, the only city to break the 30% threshold. Tampa and Miami followed at 29.4% and 27.3%, respectively.

While December’s numbers illustrated that demand remains elevated, market conditions that are being spearheaded by rising mortgage interest rates should begin to make an impact, Lazzara and Hepp said. Lazzara said that “in the short term … we should soon begin to see the impact of increasing mortgage rates on home prices.”

“The surge in mortgage rates is likely to take a bite out of the demand for housing, mostly among first-time buyers and those with limited budgets,” Hepp added. “Nevertheless, with demand remaining considerably beyond the available inventory, the pressure on home prices will remain strong, particularly as potential buyers fear further increases in mortgage rates.”


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