S&P CoreLogic Case-Shiller Index: 3.9% Annual Gain in February

Home prices continued to trend upwards in February as the benchmark national index rose for the 25th consecutive month to a 21st straight record high. The seasonally adjusted home prices for the national index saw a 0.3% increase MoM, and a 3.9% increase YoY. After adjusting for inflation, the MoM fell to 0.0% and YoY fell to -0.5%.

The S&P Case-Shiller benchmark 20-City composite aims to measure the value of residential real estate in the following 20 major U.S. cities: Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington D.C. The benchmark 20-city index rose for the 25th consecutive month to a 19th straight record high in February. The seasonally adjusted home prices for the 20-city index saw a 0.4% MoM, and a 4.5% increase YoY. After adjusting for inflation, the MoM was reduced to 0.1% and YoY was reduced to 0.1%.

The S&P Case-Shiller benchmark 10-City composite, a subset of the 20-city index, aims to measure the change in value of residential real estate in the following 10 major U.S. cities: Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington D.C. The benchmark 10-city index rose for the 25th consecutive month to a 20th straight record high in February. The seasonally adjusted home prices for the 10-city index saw a 0.5% MoM, and a 5.2% increase YoY. After adjusting for inflation, the MoM dropped to 0.2% and YoY dropped to 0.7%.

Here is the analysis from today's Standard & Poor's press release:

ANALYSIS

“Even with mortgage rates remaining in the mid-6% range and affordability challenges lingering, home prices have shown notable resilience,” said Nicholas Godec, CFA, CAIA, CIPM, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices. “Buyer demand has certainly cooled compared to the frenzied pace of prior years, but limited housing supply continues to underpin prices in most markets. Rather than broad declines, we are seeing a slower, more sustainable pace of price growth.”

The chart below, which uses seasonally adjusted data, is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-city composite was tracked. The 20-city, which is probably the most closely watched of the three, dates from 2000. All three indexes are currently at their all-time nominal highs.

This next chart shows the real-inflation adjusted indexes using the CPI owner's equivalent rent of residences. The national index reached its real all-time high in May 2022, while the 10-city and 20-city composites reached theirs during the housing bubble in March 2006.

The next chart shows the year-over-year Case-Shiller series, again using the seasonally adjusted data.

Here is the same chart as above but it has been adjusted for inflation using the CPI owner's equivalent rent of residences.

Here is a look at the seasonally and inflation-adjusted Case-Shiller price index from 1987, the first year that monthly data is available (note here we are using the regular CPI, which is indexed to 1982, not 2000).

To get an even better idea of the trend in housing prices over long time periods, we compare the change in the seasonally-adjusted Case-Shiller Home Price Index and the CPI. Since 1987, home prices have grown 416%, the consumer price index is up 187%, and real home prices are up only 80%.

ETFs associated with residential real-estate include: iShares Residential and Multisector Real Estate ETF (REZ).

For additional perspectives on residential real estate, here is the complete list of our monthly updates:

S&P CoreLogic Case-Shiller Index: 3.9% Annual Gain in February

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