Case-Shiller Home Price Index Shows Strength

Month-to-month gains in home prices have been solid since the third quarter, based on Case-Shiller data where the 20-city adjusted index rose 0.8 percent in January for the fourth straight gain near or at a monthly 1.0 percent. The year-on-year index, however, has been stuck at plus 5.7 percent for the last three months.

The breadth of strength is very convincing with all 20 cities showing both monthly and year-on-year gains going all the way back to September. The strongest rates of monthly gains in the latest report are once again in the West led by Seattle and Portland, both at 1.5 percent, with San Diego and Los Angeles right behind at 1.1 percent and 1.0 percent. Detroit and Chicago, which are often at the rear, are at the top with respective January gains of 1.4 and 1.0 percent. Year-on-year, appreciation is strongest in Portland (11.8 percent), Seattle (10.8 percent), and San Francisco (10.5 percent). At the rear is Washington DC (2.1 percent) and New York (2.8 percent).

Aside from the West, however, rates of gains are on the slow side which, given lack of wage growth, points to lack of punch for household wealth. And the year-on-year rate is likely to be held back in the Spring months given hard comparisons with pricing strength last spring.

Recent History Of This Indicator:
Case-Shiller price data are expected to track FHFA data and move sharply higher in February, up a consensus 0.7 percent for the Case-Shiller adjusted 20-city index. But Case-Shiller's year-on-year rate is expected to edge only 1 tenth higher to 5.8 percent which would be 2 tenths short of FHFA which is back at 6.0 percent, a solid rate but well short of outside expectations for 10 percent appreciation this year. Home-price appreciation, given weakness in wages, could be key to household wealth this year.