Home-Price Appreciation Flat

Inventories may be low and sales rates firm, but both Case-Shiller and FHFA are pointing to a surprising flat spot for home-price appreciation. Case-Shiller's 20-city adjusted index fell 0.1 percent in June vs Econoday expectations for a 0.1 percent rise. Year-on-year, 20-city prices, whether adjusted or unadjusted, are unchanged at plus 5.0 percent. This rate has been inching higher but looks like it may be ready to fall back unless prices pick up.

Eleven of 20 cities show declines in the month with Chicago showing the steepest at minus 1.7 percent. The biggest gainer in the month is Portland, Oregon, up 0.5 percent to extend a long run of solid gains. Year-on-year, Chicago is the weakest at plus 1.3 percent with Denver at the top at plus 10.2 percent followed by San Francisco at 9.5 percent.

Softness in home prices is a surprise and suggests that sellers are offering price concessions. Flexibility in price is a positive right now for sales but tightness in available homes for sales, along with strong demand tied to health in the labor market, point to firming prices ahead.

Recent History Of This Indicator:
Another month of disappointment is expected for Case-Shiller where the adjusted monthly gain for the 20-city index is seen at only 0.1 percent in June. This, however, would be an improvement from the 0.2 percent decline in May and no change in April. Year-on-year, rates are hovering near 5 percent which is roughly half the rate of sales growth for existing homes. Note the uncertainty among the sample with the top-end forecast all the way at plus 0.7 percent.