Case-Shiller Home Price Index at 33-Month High

Home prices, led by Seattle, Portland and other Pacific Northwest metros, reached nearly three-year highs in March, according to the Standard & Poor’s CoreLogic Case-Shiller Home Price Indices.

The report said home prices increased by 5.8%year over year in March, up from 5.7% in February and setting a 33-month high. The 10-City Composite and the 20-City Composite indices came in at 5.2% and 5.9% annual increases, respectively, unchanged from last month.

Month over month, before seasonal adjustment, the National Index posted an 0.8% gain in March. The 10-City Composite posted an 0.9% increase; the 20-City Composite reported a 1.0% increase. After seasonal adjustment, the National Index recorded an 0.3% month-over-month increase. Both the 10-City Composite and the 20-City Composite indices posted an 0.9% month-over-month increase after seasonal adjustment. Eighteen of the 20 cities reported increases in March before seasonal adjustment; after seasonal adjustment, 17 cities saw prices rise.

Seattle, Portland, and Dallas reported the highest year-over-year gains among the 20 cities. In March, Seattle led the way with a 12.3% year-over-year price increase, followed by Portland with 9.2% and Dallas with an 8.6% increase. Ten cities reported higher price increases in the year ending March than in February.

“Sales of both new and existing homes, housing starts and the National Association of Home Builders’ sentiment index are all trending higher,” said David Blitzer, Managing Director and Chairman of the Index Committee with S&P Dow Jones Indices. “Over the last year, analysts suggested that one factor pushing prices higher was the unusually low inventory of homes for sale. People are staying in their homes longer rather than selling and trading up. If mortgage rates, currently near 4%, rise further, this could deter more people from selling and keep pressure on inventories and prices. While prices cannot rise indefinitely, there is no way to tell when rising prices and mortgage rates will force a slowdown in housing.”

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

“Even in metro areas where home prices are rising modestly, prices are outpacing incomes,” said Mark Vitner, senior economists with Wells Fargo Securities, Charlotte, N.C. “The share of consumers stating now is good time to sell a house has risen above the share reporting it is a good time to buy for the past two months, according to the University of Michigan consumer sentiment survey. This may presage an increase in the number of homes on the market, which would be a welcomed development.”