FHFA Home Price Index Weak

FHFA had been holding up better than Case-Shiller but data for May point to less gradual slowing underway in home prices. FHFA's house price index managed only a 0.1 percent rise in May, at the bottom end of Econoday's consensus range and the weakest monthly showing in more than two years, since January 2017. Year-on-year appreciation remains healthy but nevertheless is down 2 tenths to 5.0 percent for the lowest showing in more than four years, since March 2015.

Regional prices are converging in FHFA's data. The Pacific region had been slowing sharply but in recent reports has improved, to a yearly 4.5 percent growth rate in May. The Mountain region which had been accelerating slowed a full percentage point in May to 6.7 percent. The Middle Atlantic, the long tail-ender in the report, is showing life and is at 4.4 percent.

Regional convergence, though less pronounced, has also been appearing in Case-Shiller and helps confirm corrections for once high-flying markets centered in the West. Easing imbalances in housing are probably a plus for the long-term health of the sector but are perhaps unexpected given this year's still strong job growth and 50-basis-point drop in mortgage rates. Case-Shiller's May data will be posted next week.