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What to Expect from Case-Shiller. Will home prices drop for the eighth straight month?

The CoreLogic Case-Shiller home price index for February is due Tuesday.

  • Current projections have home prices continuing to recede in February for the eighth straight month.

  • Elevated mortgage rates and a softening labor market have put undue strain on housing, and it’s expected home prices will experience their first annual drop since 2012.

Source: David Gyung /

S&P Global’s CoreLogic Case-Shiller home price index is due Tuesday morning, and with it comes fears of a continued cool-down in the real estate space. The February Case-Shiller may verify a growing trend of declining national home prices.

The Case-Shiller report tracks monthly changes in U.S. single-family home values. As such, it’s an important barometer for evaluating the generally pessimistic narratives surrounding the domestic real estate market.

Indeed, elevated mortgage rates have proven a major boon to the dreams of realtors across the country. From as low as 2% in the heat of the pandemic, the 30-year fixed rate has drifted past 8% in the face of the Federal Reserve’s seemingly relentless rate hike campaign.

Demand Slipping, Rates Eased (Somewhat)

That said, mortgage rates have eased somewhat this year, seemingly echoing the central bank’s slowed pace of interest rate increases. Currently, the 30-year fixed mortgage is trending a bit below 7%.

The demand for homes has been undeniably slipping in the country, in no small part due to mortgage rates. Mortgage applications, home sales, and even housing starts on new homes have slowed tremendously from their once red-hot 2021 peaks. This has largely been reflected in the Case-Shiller reports from this year.

The Case-Shiller Index for 20 large metropolitan areas declined for the seventh straight month in January, with all 20 cities reporting lower annual prices in January 2023 compared to December 2022. The 20-city composite posted an overall 0.6% monthly decrease, with 19 of 20 cities recording losses. Only Miami enjoyed a gain of 0.1%.

“2023 began as 2022 had ended, with U.S. home prices falling for the seventh consecutive month,” said Craig J. Lazzara, Managing Director at S&P Dow Jones Indices.

“The National Composite declined by 0.5% in January, and now stands 5.1% below its peak in June 2022.”

Mortgage Rates In-View Ahead of Case-Shiller Report

According to consensus estimates from FactSet, probably more of the same. According to the research firm, single-family home prices are expected to be flat in February compared to a year ago. This would mark the first time since May 2012 that home prices in the 20-city index didn’t increase annually.

This would confirm recent data from Redfin and the National Association of Home Builders (NAHB), each of whom recorded annual declines in national home prices in February and March.

Other metrics, however, paint a more ambiguous picture of the housing market. Of homes sold in March, 28% exited the market above the listing price, indicating relatively steadfast competition for homes. This comes even as existing home sales fell 2.4% from February to March, down 22% from the same month last year.

Additionally, D.R. Horton, the country’s largest public builder, far exceeded consensus earnings and net sales projections. In fact, the company recorded 23,142 net sales orders, more than 17% higher than estimates. This is a promising sign that home demand may have a hidden jump start a few months down the line.

A “Very Unique Market”

According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), these are symptoms of a mixed housing market.

“This is a very unique market,” Yun said, as Barron’s reported. “Sales are down, and even prices are down in some areas, yet from buyers’ perspective, it’s hard to get that home because they are competing with other buyers.”

With the Fed looking to raise rates at least one more time this year, mortgage rates and the housing market remain hot topics of discussion. Whether the Case-Shiller further validates this year’s downtrend remains to be seen.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

With degrees in economics and journalism, Shrey Dua leverages his ample experience in media and reporting to contribute well-informed articles covering everything from financial regulation and the electric vehicle industry to the housing market and monetary policy. Shrey’s articles have featured in the likes of Morning Brew, Real Clear Markets, the Downline Podcast, and more.

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