Home prices hit new 9th consecutive all-time-high in March: S&P CoreLogic Case-Shiller Index

The S&P CoreLogic Case-Shiller Index hitting an all-time high in March 2024. The new report shows that home prices increased month over month in all major metro markets. And here with more, we've got Brian Luke, who is the S&P Dow Jones Indices Head of Commodities, Real and Digital Assets here. Great to have you on here with us, Brian, and thanks for taking some time. You know, as we dive into a bunch of the readings that we're getting economically, how significant is this latest data as it pertains to the broader picture here from CoreLogic Case-Shiller Index, showing that new all-time high from March? Yeah, thanks for having me. I think the fact that we've hit nine consecutive all-time highs, and that's on a seasonal adjusted basis, is something that's really tremendous. We saw a period of sustained all-time highs coming out of 2020, and the COVID cycle housing market was really exploding. But it did taper off a little bit, and now we're coming back to these consecutive new levels. So one of the things I think that you look back is probably not to be afraid of an all-time high. I think over the last year, we've had 35 all-time highs in the S&P 500. And so the housing market is another asset class that's pushing new limits. What are some of the regional markets and drivers that you're tracking right now? Yeah, we're seeing broad-based gains across the market, and really less of a disparity between some regional markets and another. But one of the areas that's really grown the fastest is the Northeast. And that's a bit of a surprise. But the last five or six periods, we've seen cities like New York, Boston, Washington, D.C. really driving up the values of the home price index that we calculate. And that's what's really been pushing some of the regional trends. So we had originally seen a lot of the Sunbelt states do very well in 2020, 2021. But you look at the last 12 to 24 months, the disparity has been in those major metropolitan areas. So it could be something that more of a return to office environment is now putting people back in those cities or traditional metropolitan areas. But the cities like Tampa, Phoenix, and Dallas that were really the outperformers in 2020 and 2021 have fallen off the pace. And some of those laggards during that time are now coming back up. That's really interesting because we were speaking with a guest earlier this morning and just about how much perhaps the kind of annexation to city centers could impact the housing market once again. If you see people flowing back into and flowing into suburbs or exurbs, that was a new one for me to learn this morning as well, how that could and return to office could potentially also be a near-term type of boost, small or medium size as it may be, back into the housing market as well here, as we're still waiting for even more capacity to be brought online as well. Yeah, I think there's a lot of trends that are dictating that. A lot of that is migratory trends that we've seen. A lot of the population shift down south, but those were values of housing markets that were lower valued historically speaking. And a lot of people move there for a better quality of life and so a better quality of living in terms of their affordability of homes. But now what we're seeing in the last 12 to 24 months of data is a reversal of that. So I think that some of the outperformers, the sunshine states, they have done very well and they've continued to return positively. However, one of the areas that we're really seeing improvement is some of those larger traditional markets. And so what that's really dictating is this migration of performance that goes back to those traditional city centers like Chicago, Los Angeles, New York, those larger areas, as opposed to some of the smaller markets that were really outperforming in the 2020, 2021 periods. You've got a lot of people that are perhaps on the sideline, just waiting for the Fed to cut rates. And at this point, it's becoming a don't hold your breath type of scenario. But if there's one thing that you believe that the Fed may be watching for, what would that be? Especially as they're kind of looking across homeowners equivalent rents, they're trying to figure out where some of those areas of sticker inflation and shelter and energy, where they actually have levers that they can pull and the right timing to pull that. Yes, they do look at the St. Louis Fed. They do track the S&P CoreLogic case share and home price indices. They track everything from a consumer's perspective. I think that when you look at some of the elevated rates we've seen, that did cause a bit of a pause in the appreciation in the market in the third quarter. However, we have seen more positive month over month returns in the last couple of months. But in terms of the overall benefit for all this equity and homeowners values is, they have that as a buffer. If it's not their first and largest asset investment, it could be their second next to their retirement portfolio. That's something that's going to give them a little bit of confidence in there. What that is going to dictate for the Fed is giving them that ability. However, the homeowners can't really lock in or equitize that cash unless they sell their home. Which case they may want to do that or if they're downsizing. But there's no real tool that they can go in and say, I want to peel off a piece of that equity for retirement for a longer period of time. It does give a benefit to the homeowners and therefore translates into confidence overall in the consumer. But there's not really something that they can pull together and utilize aside from transacting and selling down. Yeah. Brian, I got to sprint to the finish. 15 seconds left here. If there's one way that you would describe the summer home buying season, as now we've had the unofficial beginning of summer already behind us this past weekend, what would that be? Well, having strength coming into the summer that we've seen in the recent months of data, I would say that that's going to be a challenge to continue that trend. However, that's when most homeowners start to move. School is out and you'll see a lot of prices, changes taking over during that time. So it really kind of sees the strength coming into the summer is interesting. Brian Luke, S&P Dow Jones Indices, Head of Commodities, Real and Digital Assets. Brian, great to see you. Thanks for hopping on with us. Thank you.