Home Price Gains Concentrated in the West

S&P Dow Jones Indices, New York, said home prices continued to rise across the country over the past 12 months, particularly in the West.  

The S&P/Case-Shiller Home Price Indices recorded a slightly higher year-over-year gain with an 0.7 percent monthly gain and an 4.7 percent annual increase in July, compared to a 4.5 percent increase in June. The 10-City Composite was virtually unchanged from last month, rising 4.5 percent year-over-year. The 20-City Composite had higher year-over-year gains, with an increase of 5.0 percent.  

By contrast, Black Knight Financial Services, Jacksonville, Fla., said this week U.S. home prices slowed to just 0.4 percent in July and to 5.3 percent year over year.   

S&P said San Francisco, Denver and Dallas reported the highest year-over-year gains among the 20 cities with price increases of 10.4 percent, 10.3 percent and 8.7 percent, respectively. Fourteen cities reported greater price increases in the year ending July. San Francisco and Denver are the only cities with a double digit increase, while Phoenix had the longest streak of year-over-year increases. Phoenix reported an increase of 4.6 percent in July 2015, the eighth consecutive year-over-year increase. Boston posted a 4.3 percent annual increase, up from 3.2 percent in June; this is the biggest jump in year-over-year gains this month.  

Before seasonal adjustment, the National Index posted a gain of 0.7 percent month-over-month in July. The 10-City Composite and 20-City Composite both reported gains of 0.6 percent month-over-month. After seasonal adjustment, the National index posted a gain of 0.4 percent, while the 10-City and 20-City Composites were both down 0.2 percent month-over-month. All 20 cities reported increases in July before seasonal adjustment; after seasonal adjustment, 10 were down, nine were up, and one was unchanged.  

“Prices of existing homes and housing overall are seeing strong growth and contributing to recent solid growth for the economy,” says David Blitzer, managing director and chairman of the Index Committee with S&P Dow Jones Indices. “Most of the strength is focused on states west of the Mississippi.”  

The only eastern city with a positive gain was Boston, while Los Angeles and Seattle were only western cities with weaker prices in July than in June.  

The report said average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2005 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is 11-13 percent. Since March 2012 lows, the 10-City and 20-City Composites have recovered by 34.4 percent and 35.7 percent, respectively.  

“Most measures of U.S. home prices seem to have stabilized around 5 percent year-over-year,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Although we expect regional variation to continue, tight levels of inventory should continue to support home prices into 2016.”