May Case-Shiller Results: Slowing, But Still Growing
At this point in the recovery, the main story in housing is less about rising home prices and more about the falling, woefully insufficient inventory of homes for sale.
As expected, growth in all three main S&P Corelogic Case-Shiller indices slowed or was flat from prior months in May – but it was still enough to push the non-seasonally adjusted indices farther into record-high territory.
The U.S. National index rose 1 percent from April (non-seasonally adjusted) and 5.6 percent year-over-year in May, the same annual pace as that recorded in April. The U.S. National Index reached an all-time high six months ago and has kept climbing in each month since.
The smaller 10- and 20-city indices rose 4.9 percent and 5.7 percent in May from a year ago, down from annual growth of 5 percent and 5.8 percent, respectively. Below are the actual Case-Shiller results for May, alongside Zillow’s forecasts:
At this point in the recovery, the main story in housing is less about rising home prices and more about the falling, woefully insufficient inventory of homes for sale. Recent data indicates there are roughly the same number of homes for sale currently as there were in 1994, but there are about 63 million more people living in this country today than there were then. On top of this simple demographic truth, a handful of economic tailwinds are also boosting demand and contributing to the inventory squeeze – employers are adding jobs, wages are growing and rock-bottom mortgage interest rates are keeping homes relatively affordable. It all adds up to a one-two punch for beleaguered buyers: Homes are often on the market for only a few days before going pending, pressing buyers to make quick decisions; and bidding wars often break out over those homes that are available, further pushing up prices. Sooner or later something will have to give – demand will fade, builders will begin delivering more new homes and/or more sellers will start coming out of the woodwork. But for the time being, expect this strong sellers’ market to continue.
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