Case-Shiller/FHFA House Prices (Jan.) - Capital Economics
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Case-Shiller/FHFA House Prices (Jan.)

US Housing Market Data Response
Written by Matthew Pointon
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House prices made further strong gains in January, although there are tentative signs that month-on-month growth is starting to ease. With mortgage rates now rising, and set to increase further over the year, that slowdown will continue. From around 12% y/y at the start of 2021, we expect house price growth will slow to around 3% y/y by the end of the year.

House prices make further strong gains

  • House prices made further strong gains in January, although there are tentative signs that month-on-month growth is starting to ease. With mortgage rates now rising, and set to increase further over the year, that slowdown will continue. From around 12% y/y at the start of 2021, we expect house price growth will slow to around 3% y/y by the end of the year.
  • House prices recorded further strong gains in January. After seasonal adjustment, Case-Shiller reported a rise of 1.2% m/m, and the FHFA a rise of 1.0% m/m. That pushed annual growth rates up to 11.2% and 12.0% respectively, which was a 15-year high for the Case-Shiller and the highest since records began in 1992 for the FHFA.
  • Record low mortgage rates, a surge in savings and move away from cities have all boosted housing demand in recent months. Combined with record low inventory, that had led to intense competition for homes and pushed prices up. But looking ahead the pressure on home values is set to ease. Mortgage rates are now rising, and we expect they will end the year at around 4.0%. Given the rise in house prices already seen, that will constrain the extent to which mortgage borrowers will be able to aggressively bid up home prices. Indeed, month-on-month gains have been slowing since October of last year. (See Chart 1.)
  • Admittedly, the reopening of the economy will boost incomes, and there is plenty of pent-up demand from frustrated buyers. Savings will also be elevated for a prolonged period. That will prevent a reversal in the gains seen over the past year. Overall, we expect annual growth will slow to around 3% y/y by end-2021.

Chart 1: Case-Shiller National & FHFA House Prices (S. Adj., %m/m)

Sources: Case-Shiller, FHFA

Table 1: Case-Shiller National & FHFA House Prices (Seasonally-Adjusted)

Jan-20

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan-21

Case-Shiller (% m/m)

0.5

0.5

0.6

0.4

0.1

0.2

0.6

1.3

1.4

1.6

1.5

1.3

1.2

(% y/y)

4.0

4.3

4.6

4.6

4.4

4.4

4.8

5.8

7.0

8.4

9.5

10.4

11.2

FHFA (% m/m)

0.5

0.9

0.2

0.2

-0.1

1.1

1.2

1.6

1.6

1.4

1.1

1.2

1.0

(% y/y)

5.9

6.4

6.4

5.9

5.2

6.0

6.7

8.3

9.3

10.3

11.1

11.5

12.0

Sources: Case-Shiller, FHFA


Matthew Pointon, Senior Property Economist, matthew.pointon@capitaleconomics.com