Reports Show Home Price Growth Well Above 5%
Year-end home price reports suggest low inventories and slow construction pushed up home prices well above 5 percent annual growth.
Black Knight Financial Services, Jacksonville, Fla., said this morning that its Home Price Index showed U.S. home prices rose by 0.2 percent in its most recent period (September) and up by 5.5 percent year over year. In a separate report last week, the Standard & Poor’s/Case-Shiller Home Price Indices reported a 5.2 percent annual growth rate in October.
Black Knight said at $254,000, the U.S. HPI is now just 5.3 percent off its June 2006 peak ($268,000) and up by nearly 27 percent from the market bottom in 2009.
New York’s 1.1 percent gain led all states for the fourth consecutive month, while New York City metro-area home prices saw a 1.2 percent increase. All five major California metro areas ranked among the nation’s 40 largest saw home prices decline in October, as did the state as a whole. Connecticut again saw the most negative monthly movement, and accounted for three of the 10 worst-performing metro areas.
Among largest states, Florida (0.3 percent) and Texas (0.2 percent) saw modest increases, while California (-0.2 percent), Illinois (-0.1 percent) and Ohio (-0.3 percent) saw decreases. Reno, Nev. (1.2 percent) matched New York City in metro growth, followed by Sebastian, Fla., Cape Coral, Fla., and Carson City, Nev. (1.0 percent).
Meanwhile, S&P said home prices continued their rise across the country over the past 12 months. All nine U.S. census divisions recorded a slightly higher year-over-year gain with a 5.2% annual increase in October versus a 4.9% increase in September. The 10-City Composite increased 5.1% in the year to October compared to 4.9% previously. The 20-City Composite’s year-over-year gain was 5.5% versus 5.4% reported in September.
San Francisco, Denver and Portland continue to report the highest year-over-year gains among the 20 cities with double-digit price increases of 10.9 percent each. Twelve cities reported greater price increases in the year ending October from September. Phoenix had the longest streak of year-over-year increases, reporting a gain of 5.7 percent in October 2015, the 11th consecutive increase in annual price gains.
Month over month, the National Index posted a gain of 0.1 percent in October. The 10-City Composite was unchanged and the 20-City Composite reported gains of 0.1 percent
“Generally good economic conditions continue to support gains in home prices,” said David Blitzer, managing director and chairman of the Index Committee with S&P Dow Jones Indices. “Among the positive factors are consumers’ expectations of low inflation and further economic growth as well as recent increases in residential construction including single-family housing starts.”
Blitzer noted inventories of existing homes have averaged around a five-month supply for the past year, a level that suggests a fairly tight market with limited supplies. Sales of new single-family homes, despite recent increases in construction, remain mixed to soft compared to the trend in existing home sales.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said home prices are being supported by tight inventories but held back by affordability concerns. “There is a clear divide between home price appreciation in metro areas with large technology sectors and most other parts of the country,” he said.
S&P said average home prices for the metropolitan 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 March 2012 lows, the 10-City and 20-City Composites have recovered 34.9 percent and 36.4, respectively.
