Sales of existing homes reached their highest volume in almost six years in August. The National Association of REALTORS reported Thursday that sales of existing homes rose 1.70 percent in August to a seasonally-adjusted annual rate of 5.48 million existing homes sold.
Summary: The most recent Case-Shiller Index shows that the price of homes has been on the increase across the country, though the rate of growth is the slowest it’s been in years.
Recent data suggests that home prices continue to rise throughout the US, but at a much slower pace compared to years prior.
According to the monthly S&P/Case-Shiller 20-City Price Index, for example, home prices in June barely made any moves. And over the past 12 months, the increase in the index marked a growth pace of just 2.1%, the slowest rate of increase since 2012.
Last year, home prices were increasing at a rate of 6.3%, which is three times the rate of increase today.
Among the 20 large cities tracked by the Case-Shiller index, 17 of them showed a rise in home prices in June, yet the majority of the increases were marginal. Over the past year, prices have increased the fastest in Las Vegas and Phoenix.
Prices dipped in Seattle, New York, and Miami in June, which are traditionally the hottest housing markets in the country. In Seattle, prices have actually dropped over the past year, marking the only major city on the index to do so.
However, mortgage rates have dipped over the past few months and are expected to remain low, which may help boost sales over the coming months.
It’s easy to point to the Case-Shiller Index as evidence that the housing market in Oregon has yet to bottom, but we have to consider the Case-Shiller Index’s shortcomings.
For example, the Case-Shiller Index is based on changes in home prices of a single home, through successive sales. This means that to calculate its home price index, the Case-Shiller searches for sales of the same home over a period of time and calculates the difference in contract price.
This methodology can distort the home price tracker downward during times of weak economy because there is no distinction made for homes sold in foreclosure or as a short sale.
2% of all homes sold in January were “distressed”, says the National Association of REALTORS®.
Another distortion in the Case-Shiller Index is that the model neglects all home types that are not of type “single-family residence”. This means that multi-unit homes and condominiums are excluded from the Case-Shiller Index model.
In some markets, such as Chicago and New York City, condominiums account for a large percentage of overall sales.
Lastly, the Case-Shiller Index is published with a “lag”, which renders it useless to buyers and sellers of Bellevue in search of real-time, relevant data. The most recent Case-Shiller Index is published with a 60-day delay, so the report issued in June only covers home sales through April.
In 2019, job growth has averaged 165,000 per month. Data that’s two months old does little to help us today.
Making sound real estate decisions is about having timely, relevant data at-hand when it’s needed. The Case-Shiller Index fails in that respect. It’s good for highlighting the U.S. housing market on the whole, as it existed in the past. For real-time market data, though, you’ll want to talk with an active real estate agent.
Have questions? Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We serve the entire state, as well as the broader Pacific Northwest region. Please contact us if you have mortgage-related questions. Last Updated: