The headline for the October S&P CoreLogic Case-Shiller
home price report is yet another month of escalating gains. The National Home
Price Index which covers all nine U.S. census divisions posted an annual
increase of 8.4 percent compared to a 7.0 percent change in September. The
National Index posted a 1.4 percent month-over-month increase before seasonal
adjustment and 1.7 percent afterward.
The 10-City Composite Index
was up 7.5 percent from the previous October and the 20-City Composite grew by
7.9 percent. Their September gains were 6.2 percent and 6.6 percent,
respectively. The 10-City index was up 1.4 percent before seasonal adjustment and
the 20-City posted a 1.3 percent change. Both composites rose 1.6 percent after
COVID-19 related delays
in reporting are still affecting Wayne County Michigan so Detroit is not
included in the indices.
Phoenix, Seattle, and San Diego continued to report
the highest year-over-year gains among the 19 cities (excluding Detroit) in
October. Phoenix was again in the lead with a 12.7 percent year-over-year price
increase. Seattle’s appreciation rate was 11.7 percent and San Diego home
prices rose 11.6 percent. All 19 cities reported higher price increases in the
year ending October 2020 versus the year ending September 2020.
“The surprising strength we noted in last month’s
report continued into October’s home price data,” says Craig J. Lazzara,
Managing Director and Global Head of Index Investment Strategy at S&P Dow
Jones Indices. “We’ve noted before that a trend of accelerating increases in
the National Composite Index began in August 2019 but was interrupted in May
and June, as COVID-related restrictions produced modestly decelerating price
gains. Since June, our monthly readings have shown accelerating growth in home
prices, and October’s results emphatically emphasize that trend. The last time
that the National Composite matched this month’s 8.4 percent growth rate was
more than six and a half years ago, in March 2014. Although the full history of
the pandemic’s impact on housing prices is yet to be written, the data from the
last several months are consistent with the view that COVID has encouraged
potential buyers to move from urban apartments to suburban homes. We’ll
continue to monitor what the data can tell us about this question.
12.7 percent increase led all cities for the 17th consecutive month.
Seattle (11.7 percent) and San Diego (11.6 percent) repeated in second and third
place. Prices were strongest in the West and Southwest regions, but even the
comparatively weak Midwest and Northeast (up 7.7 percent and 7.9 percent
respectively) performed creditably well.”
Deputy Chief Economist Selma Hepp noted, “As the last housing market
indicator in 2020, the Case Shiller Index finishes the year on a high note,
characterizing the market during this otherwise tumultuous year. The
national Case-Shiller Index jumped 8.41 percent in October – a new high- and is
growing at the fastest pace since March 2014. The index is now 25 percent above
the peak reached during pre-Great Recession. The month-to-month index
jumped 1.37 percent from September, making it the fastest increase since spring
ahead, 2021 will present a new set of challenges both for the economy and the
housing market,” Hepp said. “While distribution of coronavirus vaccinations is
underway, there may still be some bumps along the way to economic recovery.
Fortunately, some critical economic stimulus support appears to also be
underway soon, hopefully buffering the impacts of recent shutdowns. Depending
on the path of the pandemic over the next few months, policy makers may opt to
extend foreclosure moratoriums, in addition to recent extension of rent
eviction moratoriums, which will help struggling homeowners and renters. Taken
together, recent stimulus actions are likely to help housing market demand and
ensure continued home price growth.”
The S&P CoreLogic Case-Shiller
Home Price Indices are constructed to accurately track the price path of
typical single-family home pairs for thousands of individual houses from the
available universe of arms-length sales data. The National U.S. Home Price
Index tracks the value of single-family housing within the United States. The
indices have a base value of 100 in January 2000; thus, for example, a current
index value of 150 translates to a 50 percent appreciation rate since January 2000
for a typical home located within the subject market.
As of October 2020, the
National Index was at 229.93 compared to 226.80 in September. The 10- and 20-City Composites
had readings of 248.58 and 236.77, up from 245.02 and 232.53 the prior month.
Los Angeles has the highest index reading at 312.49 and Cleveland (absent data
on Detroit) the lowest at 139.83.