S&P: Home Prices Up ‘Marginally’
December home prices rose by just 0.1 percent in most key markets, Standard & Poor’s, New York, reported yesterday in its S&P/Case-Shiller Home Price Indices.
The National Home Price Index, covering all nine U.S. census divisions, posted a monthly gain of 0.1 percent in December, before seasonal adjustment. The 10-City Composite decreased by 0.1 percent, while the 20-City Composite remained unchanged in December. After seasonal adjustment, the National and 20-City Composites Index both recorded 0.8 percent monthly increases, while the 10-City Composite increased by 0.7 percent. Ten of 20 cities reported increases in December before seasonal adjustment; after seasonal adjustment, all 19 cities increased for the month.
Year over year, the Index recorded a slightly higher gain, 5.4 percent, in December compared to a 5.2 percent increase in November. The 10-City Composite increased by 5.1 percent for the year, compared to 5.2 percent in November; the 20-City Composite’s year-over-year gain held steady at 5.7 percent.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said while home price appreciation seems to be stabilizing near 5 percent, the rise in home prices continues to outpace wage growth, creating an affordability hurdle in many markets.
“There is a growing divide in home price appreciation across the country,” Vitner said. “Prices are rising rapidly in urban city centers with the strongest job gains, but are lagging in areas with modest growth.”
The report said Portland, Ore., San Francisco and Denver continue to report highest year over year gains. Portland led with an 11.4 percent year-over-year price increase, followed by San Francisco with 10.3 percent and Denver with 10.2 percent. Thirteen cities reported greater price increases in the year ending December from November. Phoenix had the longest streak of year-over-year increases, reporting a gain of 6.3 percent, the 12th consecutive increase. Detroit posted a 7.1 percent gain, up from 6.3 percent.
“While home prices continue to rise, the pace is slowing a bit,” said David Blitzer, managing director and chairman of the Index Committee with S&P Dow Jones Indices. “Sparked by the stock market’s turmoil since the beginning of the year, some are concerned that the current economic expansion is aging quite rapidly. The recovery is six years old, but recoveries do not typically die of old age. Housing construction, like much of the economy, got off to a slow start in 2009-2010 and is only now beginning to show some serious strength.
The report said as of December, average home prices for metro areas within the 10-City and 20-City Composites are back to their winter 2007 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is 11-13 percent. Since their March 2012 lows, the 10-City and 20-City Composites have recovered by 34.7 percent and 36.3 percent, respectively.
