Written by William Hillis, Research Editor & Publisher, RSIR
At 1.06 percent, Seattle’s monthly increase on the S&P CoreLogic Case Shiller Home Price Index for April 2019 was six tenths of a percent smaller than in March. More importantly, residential prices are now lower throughout the region on a seasonally adjusted basis. Local inventories and broader national trends are key factors in the decline.
The Case Shiller index is a measure of residential (single-family) resold home prices; the regular index excludes condominium sales as well as new construction. After trending lower on the index for twelve consecutive months, the index for Seattle has reached nearly a zero-percent increase year-over-year, indicating that regional home selling prices are flat. Residential prices in the other Pacific Coast gateway markets continued to rise, but only gradually: by 0.82 percent for San Diego, 1.5 percent for Los Angeles, and 1.76 percent for San Francisco.
The S&P Dow Jones press release accompanying the index results noted that “the rate of home price increases across the U.S. has continued to slow.” Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices called out the change in Seattle’s home price trajectory. “Home price gains continued in a trend of broad-based moderation. Year-over-year price gains remain positive in most cities, though at diminishing rates of change. Seattle is a notable exception, where the YOY change has decreased from 13.1 percent in April 2018 to 0.0 percent in April 2019.”
As RSIR reported in May, the SA (“seasonally adjusted”) monthly index changes had already reached the point of zero growth in March 2019. Table 3 in the Analysis section of the April Case Shiller report shows the monthly change to March from February at +1.6 percent NSA (“non-seasonally adjusted”) vs. +0.1 percent SA. From March to April, it was 1.1 percent NSA vs. -0.6 percent SA. So, to sum up, the seasonally-adjusted monthly trend for the Seattle index has been from +0.1 percent in March, to flat at -0.6 percent in April, indicating that residential home prices finally registered a year-over-year decline during that month.
Chart A: Seattle’s year-over-year Case Shiller index monthly increase has now crossed those of other Pacific Coast gateway cities to the downside.
This trend continues to align with RSIR’s previous reporting. Residential inventories continue to rise in the “Seattle MSA”—the geographic scope of the Case Shiller Seattle index, which comprises King, Pierce, and Snohomish Counties. The year-over-year difference in monthly inventories peaked in November 2018, but that gap narrowed in May 2019, although transactions in that month will not factor into the index until next month. (See Chart B.)
New listings were higher in April for a second straight year, following the notable shortfall of new listings in 2017. In the preceding three years, new listings regularly exceeded monthly inventory by many hundreds during the spring, with demand driving time on market in the most desirable areas to two weeks or less. Yet in 2019, the gap between new listings and inventory has been razor-thin, as homes for sale are taking longer to close. Listing brokers and sellers of most residential homes should consider all these factors—price, market times, and current inventory—when deciding upon the duration of a listing and the promotional efforts required to sell it.
Chart B: the upward shift in monthly inventories of homes for sale in the Seattle MSA occurred in April 2018, when inventory was less than one-third of the April 2019 figure; and they continue higher to date.
Dean Jones, owner and CEO of Realogics Sotheby’s International Realty, reflected on the origins and future indications of the index trend. “For some context, it would be difficult to replicate the market conditions from April 2018 when inventory was at record lows. Many homes were selling above asking prices, and there were no market headwinds associated with politics, the stock market, or interest rates. But by May 2018, the market started to waver, with political instability, Amazon’s HQ2 location, rising interest rates, rising inventory, and by September, a correcting stock market. It will take a few more months for the year-over-year stats to post improvements, but we predict it will happen this summer.”
Chart C: the negative difference between new listings and overall inventory, ranging from 800 to over 2,000 in the spring months, has nearly disappeared in 2019.
Chart D: April home prices were lower year-over-year in the Seattle MSA, King County, and the Eastside, although May shows prices higher in the broader region.
For more details on the April 2019 Case-Shiller Index results, download the S&P Dow Jones Case-Shiller summary report. For a copy of our 2018/2019 Market Report, along with details on the implications for homes in your neighborhood, contact a local RSIR broker. Waterfront home buyers and sellers: see our 15-month 2019 waterfront report at RSIRWaterfront.com.
 “Annual Home Price Gains Continue to Fall According to S&P CoreLogic Case-Shiller Index,” S&P Dow Jones Indices, 25 June 2019
 The NSA figure was corrected from the previous month’s report. It was previously shown at +0.6 percent.
 As noted in our March 2019 Case Shiller report, it is “consistent with forward-looking remarks and community median price forecasts in Realogics Sotheby’s International Realty’s 2018/2019 Market Report published in March. It is understood that all neighborhoods, property types, and price points behave differently, as our reports have regularly indicated.”
 The April monthly year-over-year differences were +141 in 2016, -1,031 in 2017, +460 in 2018, and +301 in 2019.