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Index for Conforming Loan Limit Increases 18.04% YoY.

Both the Case-Shiller House Price Index (HPI) and the Federal Housing Finance Agency (FHFA) HPI for September were released today. Here is a graph of the month-over-month (MoM) change in the Case-Shiller National Index Seasonally Adjusted (SA).

The MoM increase in Case-Shiller was at 1.18%; still historically high, but lower than the previous 13 months. House prices started increasing sharply in the Case-Shiller index in August 2020, so the last 14 months have all been historically very strong, but the peak MoM growth is behind us - and the year-over-price growth is starting to decelerate.

FHFA House Price Index and Conforming Loan Limit

As I discussed in How Much will the Fannie & Freddie Conforming Loan Limit Increase for 2022?, the FHFA HPI is used to determine the increase in the Conforming Loan Limit. The relevant quarterly index, the Expanded-Data Indexes (Estimated using Enterprise, FHA, and Real Property County Recorder Data Licensed from DataQuick for sales below the annual loan limit ceiling), was released this morning, and it was up 18.04% YoY. The actual 2022 CLL will be released later.

On the FHFA index: U.S. House Prices Rise 18.5 Percent over the Last Year; Up 4.2 Percent from the Second Quarter

U.S. house prices rose 18.5 percent from the third quarter of 2020 to the third quarter of 2021 according to the Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices were up 4.2 percent compared to the second quarter of 2021. FHFA’s seasonally adjusted monthly index for September was up 0.9 percent from August. …

“House price appreciation reached its highest historical level in the quarterly series,” said William Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics. “Compared to a year ago, annual gains have increased in every state and metro area. Real estate prices have risen exceptionally fast, but market momentum peaked in July as month-over-month gains have moderated.”

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This is both the monthly and the quarterly index. Here is a graph from the FHFA report showing the annual change by region for September 2021 compared to September 2020. Prices have increased sharply everywhere, but especially in the Mountain, Pacific and South Atlantic regions.

Case-Shiller House Prices

From S&P: Annual Home Price Gains Remained High in August According To S&P Corelogic Case-Shiller Index

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 19.5% annual gain in September, down from 19.8% in the previous month. The 10-City Composite annual increase came in at 17.8%, down from 18.6% in the previous month. The 20- City Composite posted a 19.1% year-over-year gain, down from 19.6% in the previous month. …

“If I had to choose only one word to describe September 2021’s housing price data, the word would be ‘deceleration,’ says Craig J. Lazzara, Managing Director at S&P DJI. “Housing prices continued to show remarkable strength in September, though the pace of price increases declined slightly.The National Composite Index rose 19.5% from year-ago levels, with the 10- and 20-City Composites up 17.8% and 19.1%, respectively. This month, however, the rate of price growth began to decline, as each of our three composites rose less in September than in August.
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This graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).


The Composite 10 index is up 0.8% in September (SA). The Composite 20 index is up 1.0% (SA) in September. The National index is 46% above the bubble peak (SA), and up 1.2% (SA) in September. The National index is up 98% from the post-bubble low set in February 2012 (SA).


The Composite 10 SA is up 17.8% year-over-year. The Composite 20 SA is up 19.1% year-over-year. The National index SA is up 19.5% year-over-year.

House Prices and Inventory

This graph below shows existing home months-of-supply (inverted, from the NAR) vs. the seasonally adjusted month-to-month price change in the Case-Shiller National Index (both since January 1999 through September 2021).


There is a clear relationship, and this is no surprise (but interesting to graph). If months-of-supply is high, prices decline. If months-of-supply is very low (like now), prices rise quickly.

In September, the months-of-supply was at 2.4 months, and the Case-Shiller National Index (SA) increased 1.18% month-over-month. The black arrow points to the September 2021 dot.

In the October existing home sales report, the NAR reported months-of-supply decreased to 2.4 months in October. There is a seasonal pattern to inventory, but this is still very low - and prices are increasing sharply.

My sense is the Case-Shiller National annual growth rate of 19.8% in August was probably the peak, and that YoY price increases will continue to slow in coming months. Still - since the normal level of inventory is probably in the 4 to 6 months range - we’d have to see a significant increase in inventory to sharply slow price increases, and that is why I’m focused on inventory!

https://calculatedrisk.substack.com/p/case-shiller-national-index-up-195?source=patrick.net