US: Home price appreciation continues to outpace income growth - Nomura

Analysts at Nomura note that in the US, the Case-Shiller 20-city composite home price index increased 0.1% m-o-m in June, bringing the y-o-y rate to 6.3%, down 0.2pp from May.

Key Quotes

“Despite the tick down in the y-o-y rate, home price appreciation continues to outpace that of income growth and will likely worsen affordability.”

“Combined with rising mortgage rates and an undersupply of available homes, today’s Case-Shiller numbers are consistent with our somewhat pessimistic outlook for residential investment.”

“Looking at the details, as has been the case for some time, cities in the West, including Las Vegas, Seattle and San Francisco, showed the highest y-o-y home price increases, all between 10.6% and 13%.”