The stock market bounced back from its December lows but house price increases continued to shrink and real, inflation-adjusted prices actually fell (slightly) over the last 12 months in five of the 20 major metro areas covered by Case-Shiller data.

Real Case-Shiller Home Prices Changes Over Last 12 Months

That’s what I found when I applied the Consumer Price Index (CPI-U) to the S&P CoreLogic Case-Shiller Home Price Index for March (released this week) and compared it to the March 2018 numbers. Be aware the March numbers are really January-March averages so Case-Shiller data doesn’t jump around a lot month to month.

Looking at nominal house prices instead of inflation-adjusted prices for those five cities we can see all five have appreciated less than the 1.9% inflation rate from March 2018 to March 2019.

Home Price Changes Over Last 12 Months
Home Price Changes Over Last 12 Months

When the June data comes out (end of August), Seattle’s appreciation could very well be negative. If that happens, that would be the first time a Case-Shiller city has gone negative year-over-year in nominal prices since Cleveland in 2014.

Upward House Price Momentum Slows

Although nominal Case-Shiller home prices increased for the U.S. overall and for all 20 Case-Shiller metros, home price increases were also slowing everywhere.

House Price Momentum Now Shrinking in ALL 20 Case-Shiller Cities

Seattle and San Francisco were the extremes. Seattle home prices increased 13% from March 2017 to March 2018 but only 2% the next 12 months. San Francisco prices increased 11% from March 2017 to March 2018 but only 1% the next 12 months.

Nationally, house prices increased 7% from March 2017 to March 2018 but only 4% the next 12 months.

Now, 4% house price appreciation is still good but the big worry is whether house price momentum will continue to soften over the next 12 months. Will more cities follow the West Coast cities and see house price increases less than the inflation rate over the next 12 months? The economy is very strong right now but what happens to house prices when the economy eventually slows?

An earlier version of this piece was published on

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