Case-Shiller: Home Prices in 20 US Cities Increase More Than Forecast

Home prices in 20 U.S. cities climbed more than forecast in March, driven by rising demand and a lack of inventory, according to S&P CoreLogic Case-Shiller data released Tuesday.

Highlights of Home Prices (March)

  • 20-city property values index increased 6.8% y/y (est. 6.5%), matching the y/y gain in February that was the largest since June 2014, 
  • National home-price gauge climbed 6.5% y/y, matching February’s y/y advance that was the biggest since May 2014
  • Seasonally adjusted 20-city index rose 0.5% m/m (est. 0.8%) after a 0.8% gain

Key Takeaways

Cities posting the largest annual advances in March included Seattle, Las Vegas and San Francisco. Demand is being supported by the healthy labor market and borrowing costs that are still relatively low by historical standards. Nonetheless, 30-year fixed-rate mortgages have climbed to the highest since 2011. A persistent shortage of available properties will probably support further home-price appreciation, limiting the extent to which sales can pick up.

As property-price appreciation continues to outpace worker pay, it is proving a disadvantage for younger or first-time buyers even as it means rising homeowner equity for others.

Economist Views

“Months-supply, which combines inventory levels and sales, is currently at 3.8 months, lower than the levels of the 1990s, before the housing boom and bust,” David Blitzer, chairman of the S&P index committee, said in a statement. “Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising.”

Other Details

  • All 20 cities in the index showed year-over-year gains, led by a 13 percent increase in Seattle, a 12.4 percent advance in Las Vegas and 11.3 percent pickup in San Francisco
  • After seasonal adjustment, Seattle, Las Vegas and Minneapolis had the biggest month-over-month increases at 1.3 percent 
  • Home prices fell 0.2 percent in Cleveland from the prior month