Home prices increased for the 71st-straight month, according to the latest S&P CoreLogic Case-Shiller National Home Price NSA Index. Experts believe prices will continue to rise until the market sees an increase in inventory or the economy slows.

The average home price in the nine markets that the index considers, rose 6.5 percent from March 2017 to March 2018, the same year-over-year increase as February. Over the past 71 months, prices have averaged a rise of 6 percent, year-over-year. The average home price also saw a 0.8 percent increase from February to March, before seasonal adjustment. 

David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said that rapidly rising home prices and low inventories stand out among the data. Months-supply — a combination of inventory levels and sales — is currently at 3.8 months, lower than the levels of the 1990s prior to the housing boom and bust.

“Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising,” Blitzer said. “Compared to the price gains of the last boom in the early 2000s, things are calmer today.”

Lawrence Yun, chief economist for the National Association of Realtors, believes the continuing run-up in home prices above the pace of income growth is unsustainable. He echoed Blitz’s sentiments that more supply will be important to drive prices down.

“From the cyclical low point in home prices six years ago, a typical home price has increased by 48 percent while the average wage rate has grown by only 14 percent,” Yun said. “Rising interest rates also do not help with affordability. Therefore, more supply is needed to level out home prices. Homebuilding will be the key as to how the housing market perform in the upcoming years.”

Home price growth continues to be the highest in Seattle, which saw a year-over-year increase of 13 percent — double the national average. Las Vegas and San Francisco saw the second biggest gains in price, at 12.4 percent and 11.3 percent, respectively.

Even Chicago, the city with the lowest year-over-year gain, saw an increase of 2.8 percent, nearly a percentage point ahead of the inflation rate. Overall 12 of the 20 cities that the report looks at saw greater price increases in the year ending March 2018 versus the year ending February 2018.

About the Index

The S&P/Case-Shiller U.S. National Home Price Index is a composite of single-family home price indices that is calculated every month; the indices for the nine U.S. Census divisions are calculated using estimates of the aggregate value of single-family housing stock for the time period in question.

The nine divisions are:

  • New England
  • Middle Atlantic
  • East North Central
  • West North Central
  • South Atlantic
  • East South Central
  • West South Central
  • Mountain
  • Pacific

CoreLogic serves as the calculation agent for the S&P/Case-Shiller U.S. National Home Price Index.

Email Patrick Kearns

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