Seasonally adjusted house prices through April as measured by both the FHFA (red in the graph below) and Case Shiller (blue) Indexes rose, the former by 0.7% and the latter by 0.5%. This is the third straight increase in a row. Thus house prices have probably bottomed. But on a YoY basis, prices have continued to decelerate sharply, with the FHFA index only up 3.1%, and the Case Shiller index actually showing an outright decline for the first time, down -0.3%:

(Click on image to enlarge)

House prices are nevertheless presently increasing at among their lowest YoY rates in the past 25 years. Only during the Great Recession and its aftermath were they lower.

This continues to imply a further deceleration in shelter inflation in the CPI, as shown in the below graph which compares the current Case Shiller reading (/2.5 for scale) with Owners’ Equivalent Rent in the CPI:

(Click on image to enlarge)

The only question in my mind is how long OER remains at its current plateau of +8.0% YoY before it begins to decline sharply. I continue to think we will see shelter inflation in the CPI of only about 2% by the end of next winter.

I will report on new home sales separately later today.

More By This Author:

Back To The Basics: How Do Initial Claims, Total Hours Worked, Aggregate Real Payrolls, And Job Growth Relate?
Initial Claims: Yellow Caution Flag Turns More Orange
Real Wage Growth Leads Spending; Meaning Spending Seems Likely To Stall After An Increase Over The Next Few Months