Why the S&P Case-Shiller Home Price Indices slowed in October



House prices’ growth slows

House prices’ growth continued to slow across the US in October. It’s measured by the S&P Case-Shiller Home Price Indices. The indices measure residential real estate prices across the country. They track changes in these prices in 20 metropolitan regions. They also track the changes for ten cities.

The 20-city Composite Home Price Index covers the following areas—Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa and Washington, DC.

Article continues below advertisement

S&P Case-Shiller Indices’ performance

The national index fell 0.2% month-over-month in October. The 20-city and ten-city composite indices declined 0.1% each. On a year-over-year, or YoY, basis, the national index rose 4.6% in October. It rose 4.8% in September. The 20-city and ten-city indices were up 4.5% and 4.4%, respectively. They increased 4.8% and 4.7% in September.

Dr. David Blitzer is the chairman of the Index Committee at S&P Dow Jones Indices. He commented that “After a long period when home prices rose, but at a slower pace with each passing month, we are seeing hints that prices could end 2014 on a strong note and accelerate into 2015.”

Falling prices negatively affect homebuilders’ financial performance—like KB Home (KBH), PulteGroup (PHM), and D.R. Horton (DHI). As a result, ETFs—like the S&P SPDR Homebuilder ETF (XHB)—are also affected. The ETF also has exposure to home-related retailers—like Lowe’s (LOW) and Home Depot (HD). These retailers are also affected by the report.

Ten of the 20 metropolitan areas reported a fall in prices. Nine metropolitan areas reported a rise. San Diego reported no change in October. Tampa and San Francisco led with an 0.8% rise month-over-month. Chicago led the decliners with a fall of 1%. It was followed by Cleveland with a fall of 0.7%.

In the next part of this series, we’ll look at US consumers’ confidence.


More From Market Realist