Year-Over-Year Home Price Gap Narrows
After thirteen months of shrinking gains that turned to outright declines this past spring, Seattle residential prices according to the Case Shiller Home Price Index finally improved in July. Published by S&P Dow Jones, the index of residential home sales in King, Snohomish, and Pierce Counties still shows prices lower year over year, but by a lesser percentage in July 2019 than in June. The improvement could point to a return to seasonally higher home prices across the three counties by August, as already indicated by data for that month from the Northwest Multiple Listing Service (NWMLS). Yet prices are likely to remain lower on a month-by-month basis, and prospective sellers are cautioned that the monthly increases on the index have been narrowing since March: from +1.65 percent that month to +1.06 percent in April, +0.98 percent in May, +0.56 percent in June, and +0.23 percent in July.
The shift in trajectory comes six months after a seven-month string of monthly decreases in the index that were often misreported as price declines by sources other than RSIR. During those months, there were fewer home sales in many parts of King County even as selling prices remained buoyant. But since actual price declines began to prevail in late 2018 and early this year, the numbers of sales rose in these areas, with sellers adjusting their expectations to changing market conditions. By mid-autumn, selling volumes may be expected to stabilize along with residential selling prices and market times.
In the S&P Dow Jones press release announcing the July Case Shiller results, Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices reported:
Charlotte surpassed Tampa to join the top three cities, and Seattle may be turning around from its recent negative streak of YOY price changes, improving from -1.3 percent in June to [-0.6][1] percent in July.
Overall, leadership remains in the southwest (Phoenix and Las Vegas) and southeast (Charlotte and Tampa) … Home price gains remained positive in low single digits in most cities, and other fundamentals indicate renewed housing demand.[2]
In recent months, other cities with slower-rising prices have joined Seattle in seeing their year-over-year index gains reduced: Atlanta, from +5.8 percent in July 2018 to +4.0 percent in July 2019; Chicago, from +3.0 percent to +1.6 percent; Miami, Florida, from +5.0 percent to +2.7 percent; and New York City, from +3.4 percent to +0.9 percent.
Chart A: The course of Seattle’s year-over-year Case Shiller index decline turned upwards in July 2019. Note that by “decline,” we mean a year-over-year index decline, not a residential price decline. As will be seen from the axis on the left, Seattle’s Case Shiller results did not turn negative until the results for May, issued in July. The overall region did not see lower median prices until 2019.
For more details on the July 2019 Case-Shiller Index results, download the S&P Dow Jones Case-Shiller summary report.
Among other West Coast cities, Case Shiller shows residential price trends in San Francisco and Los Angeles following the path established earlier by Seattle, while prices have risen steadily in Portland and widened their gains in San Diego. August selling price statistics from the NWMLS show Seattle residential prices higher year-over-year by August.
Chart B: Residential prices in San Diego and Portland remain higher year over year, while gains have contracted in Los Angeles and San Francisco. The price trend in Seattle slightly improved in July.
Chart C (above): By August, residential prices recorded by the NWMLS appeared to be recovering year-over-year in King County and on the Eastside.
[1] The official S&P Dow Jones press release incorrectly reports the year-over-year change at Seattle as “-0.06 percent.”
[2] Charlotte Joins Top Three Cities in Annual Home Price Gains According to S&P CoreLogic Case-Shiller Index,” S&P Dow Jones Indices, New York, 24 September 2019.
Written by William Hillis