S&P: Home Prices Up 5.4%
Standard & Poor’s, New York, said its Case-Shiller Home Price Indices showed home prices continued to rise on a consistent basis year over year, while slowing in January.
The National Home Price Index showed a slightly higher year-over-year gain in January, 5.4 percent. The 10-City Composite rose slightly to 5.1 percent, while the 20-City Composite recorded a 5.7 percent gain. After seasonal adjustment, the National, 10-City Composite, and 20-City Composite rose by 0.5%, 0.8%, and 0.7%, respectively, from the prior month.
Month over month, the National Index, the 10-City Composite, and the 20-City Composite all remained unchanged in January. After seasonal adjustment, all three composites reported strong advances. Eleven of 20 cities reported increases in January before seasonal adjustment; after seasonal adjustment, all 20 cities increased for the month.
The report said Portland, Seattle and San Francisco reported the highest year-over-year gains among the 20 cities with double digit annual price increases. Portland led with 11.8 percent, followed by Seattle with 10.7 percent and San Francisco at 10.5 percent. Eleven cities reported greater price increases in the period ending January from the previous month.
“Home prices continue to climb at more than twice the rate of inflation,” said David Blitzer, managing director and chairman of the Index Committee with S&P Dow Jones Indices. “The low inventory of homes for sale–currently about a five-month supply–means that would-be sellers seeking to trade-up are having a hard time finding a new, larger home.”
Blitzer noted while low inventories and short supply are boosting prices, financing continues to be a concern for some potential purchasers, particularly young adults and first time home buyers. “The issue is availability of credit for people with substantial student or credit card debt,” he said. “While rising home prices are certainly a factor deterring home purchases, individual financial positions are more important than local housing market conditions.”
The report said 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 March 2012 lows, the 10-City and 20-City Composites have recovered by 34.5 percent and 36.2 percent, respectively..
“While all 20 cities in the S&P/Case-Shiller Composite showed year-to-year gains, price appreciation has clearly moderated in many gateway markets,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “Slower growth in Europe, China and Latin America, combined with the stronger U.S dollar has cut foreign demand, particularly in New York City and Miami. Price gains have also moderated in Chicago and Washington D.C.”
Earlier this week, Black Knight Financial Services, Jacksonville, Fla., reported a very slight increase in U.S. home prices in January, rising by just 0.1 percent in December and slowing to a 5.3 percent yearly pace. At $253,000, Black Knight said the national Home Price Index is now just 5.4 percent off its June 2006 peak ($267,000). Home prices have risen by 26.7 percent since bottoming out in 2012.
