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First Cut: FHFA and S&P CoreLogic Case-Shiller indexes tell a similar tale for deceleration in home prices increases

The FHFA House Price Index for December was up 0.3% month-over-month, and up 5.6% compared to a year earlier. The S&P CoreLogic Case-Shiller Home Price Index was also up 0.3% from November, and was up 4.75% compared to December 2017.

It is less severe in the FHFA measure than the Case-Shiller index, but in both cases it is clear that increases in home prices have lost momentum since early- to mid-2018 along with the pace of home sales. On the plus side this gives potential home buyers more bargaining power in negotiating a purchase. As a negative, it discourages potential home sellers from putting a property on the market when trading up — or down — to another property. Slower sales were in part due to increases in mortgage rates which affected home affordability along with higher prices. Now that mortgage rates have again moderated, the deceleration in home prices could level off. It may even pick up a bit if the spring buying season proves more vigorous than expected at present.

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