by Calculated Risk on 7/27/2021 09:12:00 AM
S&P/Case-Shiller released the monthly Home Price Indices for May (“May” is a 3 month average of March, April and May prices).
This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census
divisions, reported a 16.6% annual gain in May, up from 14.8% in the previous month. The 10-City
Composite annual increase came in at 16.4%, up from 14.5% in the previous month. The 20-City
Composite posted a 17.0% year-over-year gain, up from 15.0% in the previous month.
Phoenix, San Diego, and Seattle reported the highest year-over-year gains among the 20 cities in May.
Phoenix led the way with a 25.9% year-over-year price increase, followed by San Diego with a 24.7%
increase and Seattle with a 23.4% increase. All 20 cities reported higher price increases in the year
ending May 2021 versus the year ending April 2021.
Before seasonal adjustment, the U.S. National Index posted a 2.1% month-over-month increase in
May, while the 10-City and 20-City Composites both posted increases of 1.9% and 2.1%, respectively
After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 1.7%, and
the 10-City and 20-City Composites both posted increases of 1.7% and 1.8%, respectively. In May, all
20 cities reported increases before and after seasonal adjustments.
“Housing price growth set a record for the second consecutive month in May 2021,” says Craig J.
Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. “The National
Composite Index marked its twelfth consecutive month of accelerating prices with a 16.6% gain from
year-ago levels, up from 14.8% in April. This acceleration is also reflected in the 10- and 20-City
Composites (up 16.4% and 17.0%, respectively). The market’s strength continues to be broadly-based:
all 20 cities rose, and all 20 gained more in the 12 months ended in May than they had gained in the 12
months ended in April. Prices in 18 of our 20 cities now stand at all-time highs, as do the National
Composite and both the 10- and 20-City indices.
“A month ago, I described April’s performance as “truly extraordinary,” and this month I find myself
running out of superlatives. The 16.6% gain is the highest reading in more than 30 years of S&P
CoreLogic Case-Shiller data. As was the case last month, five cities – Charlotte, Cleveland, Dallas,
Denver, and Seattle – joined the National Composite in recording their all-time highest 12-month gains.
Price gains in all 20 cities were in the top quartile of historical performance; in 17 cities, price gains
were in top decile.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by
reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes.
May’s data continue to be consistent with this hypothesis. This demand surge may simply represent an
acceleration of purchases that would have occurred anyway over the next several years. Alternatively,
there may have been a secular change in locational preferences, leading to a permanent shift in the
demand curve for housing. More time and data will be required to analyze this question.
The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).
The Composite 10 index is up 1.7 in May (SA).
The Composite 20 index is up 1.8% (SA) in May.
The National index is 38% above the bubble peak (SA), and up 1.7% (SA) in May. The National index is up 86% from the post-bubble low set in February 2012 (SA).
The Composite 10 SA is up 16.4% compared to May 2020. The Composite 20 SA is up 17.0% year-over-year.
The National index SA is up 164.6% year-over-year.
Price increases were slightly above expectations. I’ll have more later.