The S&P Cotality Case-Shiller Index will post an updated report on Tuesday with single-family home price values through February. It will likely reflect continued price stagnation, but it will not yet show market disruption due to geopolitical turmoil.
Here are five things to look out for ahead of the report:
- Inflation will likely continue outpacing home price growth
In the last eight months, inflation has consistently been higher than national home price appreciation, cutting into real home values even while nominal prices remained positive. Last month’s Case-Shiller release showed a 0.9% annual gain, down from 1.1% in the month prior, a sign that home price growth is losing momentum. Economists expect this to continue, reinforcing that many homeowners see price appreciation on paper but have weaker purchasing power in reality.
- Buyers may be gaining leverage
More inventory and slower home price growth may be giving buyers some more room to negotiate, even if it isn’t fully a buyer’s market. Zillow estimated that inventory rose year over year for the 27th straight month by February, suggesting that sellers are facing more competition. However, buyers do not have the upper hand in every case, especially first-time buyers, who are highly sensitive to mortgage rates. If price growth continues to cool while housing supply improves, the balance of power could keep shifting away from sellers.
- A harsh winter likely slowed sales
Major cold fronts and storms swept much of the country in February, which likely delayed home showings, listings, and closings. A slowdown driven by the weather can make the market appear weaker than it actually is in the short term. While demand may rebound as spring approaches, this report will likely show softer numbers because February was a quiet month for the housing market.
- Regional divergence could keep widening
The national index is expected to continue masking an uneven market, where some cities show large gains while others cool. In New York City and Chicago, home price growth keeps rising, posting 4.93% and 4.63% growth year over year, respectively, last month. However, cities like Tampa (-2.54%) and Phoenix (-1.59%) have seen a decline in home prices. A continuation of this pattern would suggest a widening gap between softer Sun Belt cities and other major metros. Just four years prior, Phoenix and Tampa posted the highest year over year price gains among the 20 cities tracked, but now they show a strong reversal in housing momentum.
- Impacts from the Iran war won’t show up
The data in this report is released on a two-month lag, meaning it will show home price growth through February 28, the day that the war with Iran began. Therefore, this report serves as a snapshot of the market before political uncertainty. The indices will not show ripple effects from the war, such as mortgage rates that surged to a seven-month high at the end of March.