S&P CoreLogic Case-Shiller Index Hits New High

S&P Dow Jones Indices reported its CoreLogic Case-Shiller Indices surpassed its previous peak in 2006.

The National index reported a 5.5% annual gain in September, up from 5.1% in August. The 10-City Composite posted a 4.3% annual increase, up from 4.2% the previous month. The 20-City Composite reported a year-over-year gain of 5.1%, unchanged from August. The National index said home prices beat the previous high set in July 2006, when the market topped out. The report said home prices increased for the 53rd consecutive month.

Seattle, Portland and Denver reported the highest year-over-year gains among the 20 cities over each of the past eight months. Seattle led with an 11.0% year-over-year price increase, followed by Portland with 10.9% and Denver at 8.7%. Twelve cities reported greater price increases in the year ending September.

Month over month, before seasonal adjustment, the National Index posted a gain of 0.4% in September. Both the 10-City Composite and the 20-City Composite posted 0.1% increases. After seasonal adjustment, the National Index recorded an 0.8% increase, the 10-City Composite posted an 0.2% increase; the 20-City Composite reported an 0.4% month-over-month increase. Fifteen of 20 cities reported increases in September before seasonal adjustment; after seasonal adjustment, all 20 cities saw prices rise.

The new peak in the National Index “will be seen as marking a shift from the housing recovery to the hoped-for start of a new advance” said David Blitzer, Managing Director and Chairman of the Index Committee with S&P Dow Jones Indices. “We are currently experiencing the best real estate returns since the bottom in July of 2012 when prices rose at a 5.9% real annual rate. Given history, this trend is unlikely to be sustained.”

The report said average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2007 levels.

However, Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said increases in the national home price index, when coupled with the recent pick up in mortgage rates, “is adding further to affordability challenges.”

And Ralph McLaughlin, senior economist with Trulia, San Francisco, noted the change from recovery advance is “very much uneven” at best. “When controlling for inflation, markets that have reached their pre-recession peaks are few and almost exclusively in the West and South,” he said. And within those markets, it’s mostly high-end homes that have surpassed the peak.”

McLaughlin added that crossing the pre-recession threshold is “largely symbolic.”

“After controlling for inflation, home prices in the U.S. are still about 20% below the peak,” McLaughlin said. “Home prices reaching their nominal pre-recession peaks brings mixed news for the housing market. It’s good news for homeowners who are no longer underwater, but not so great news for homebuyers who have seen prices outpace incomes for most of the housing market recovery.”