S&P: Home Price Indexes at Highest Pace in 2-1/2 Years
S&P Dow Jones Indices, New York, said home prices rose in December for the 56th consecutive month, at the fastest pace since June 2014.
The S&P/CoreLogic Case-Shiller Indices reported a 5.8 percent annual gain in December, up from 5.6 percent in November, setting a 30-month high. The 10-City Composite posted a 4.9 percent annual increase, up from 4.4 percent in November. The 20-City Composite reported a year-over-year gain of 5.6 percent, up from 5.2 percent in November.
Before seasonal adjustment, the National Index posted a month-over-month gain of 0.2 percent in December. Both the 10-City Composite and the 20-City Composite indices posted 0.3 percent increases. After seasonal adjustment, the National Index recorded a 0.7 percent month-over-month increase, while the 10-City and 20-City Composites each reported 0.9 percent month-over-month increases.
The report said 18 of 20 cities reported increases in December before seasonal adjustment; after seasonal adjustment, all 20 cities saw prices rise. Seattle, Portland and Denver reported the highest year-over-year gains among the 20 cities. Seattle led with a 10.8 percent year-over-year price increase in December, followed by Portland with 10.0 percent and Denver at 8.9 percent. Twelve cities reported greater price increases in the year ending December.
Additionally, tier-level analysis from 2011 to present showed Seattle’s year-over-year returns for housing prices in the high tier (over $532,716) to be the most stable while housing prices in the low tier (under $335,111) were the most volatile. During the same period, Portland’s year-over-year returns also the high tier (over $411,335) to be most stable, while housing prices in the low tier (under $296,361) were the most volatile.
“With all 20 cities seeing prices rise over the last year, questions about whether this is a normal housing market or if prices could be heading for a fall are natural,” said David Blitzer, Managing Director and Chairman of the Index Committee with S&P Dow Jones Indices. “One factor behind rising home prices is low inventory.”
The report said as of December, average home prices for the metro areas within the 10-City and 20-City Composites are back to their winter 2007 levels.
Ralph McLaughlin, chief economist with Trulia, San Francisco, said home price gains suggest the U.S. housing market is picking up steam.
“Home price increases in December were the largest in two and a half years, and homebuyers should expect the quickening of price gains to persist this spring buying season,” McLaughlin said.
McLaughlin noted the reports suggests home price gains are “finally” spreading into previously cool markets. “This spring housing market is shaping up to be another doozy for homebuyers,” he said. “Housing affordability is the key to helping break yet another year of gridlocked inventory, but all signs are showing that homes this spring will be much less affordable than last year.”
