Home Price Reports Cite Continued Steady Gains

Reports released over the holiday break cited continued home price appreciation as housing inventories got scarcer.

S&P Dow Jones Indices, New York, said its CoreLogic Case-Shiller Home Price Indices reported a 6.2% annual gain in October, up from 6.1% in September. The 10-City Composite rose by 6.0%, up from 5.7% in September; the 20-City Composite posted a 6.4% year-over-year gain, up from 6.2% in September.

S&P said as of October, average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2007 levels.

Seattle, Las Vegas and San Diego reported the highest year-over-year gains among the 20 cities. In October, Seattle led the way with a 12.7% year-over-year price increase, followed by Las Vegas with a 10.2% increase, and San Diego with an 8.1% increase. Nine cities reported greater price increases in the year ending October 2017 versus the year ending September 2017.

Before seasonal adjustment, the National Index, 10-City and 20-City Composites all posted month-over-month gains of 0.2% in October. After seasonal adjustment, the National Index, 10-City and 20-City Composites all recorded a 0.7% month-over-month increase in October. Eleven of 20 cities reported increases in October before seasonal adjustment, while all 20 cities reported increases after seasonal adjustment.

“Home prices continue their climb supported by low inventories and increasing sales,” said David Blitzer, Managing Director & Chairman of the Index Committee with S&P Dow Jones Indices. “Underlying the rising prices for both new and existing homes are low interest rates, low unemployment and continuing economic growth. Some of these favorable factors may shift in 2018. The Fed is widely expected to raise the Fed funds rate three more times to reach 2% by the end of the New Year. Since home prices are rising faster than wages, salaries, and inflation, some areas could see potential home buyers compelled to look at renting. Data published by the Urban Institute suggests that in some West coast cities with rapidly rising home prices, renting is more attractive than buying.”

“Home price appreciation is clearly ramping up across the country,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “While most West Coast markets continue to see large price gains, price appreciation has picked up in most major markets.”

Vitner noted while home prices have rebounded past their previous highs in nominal terms, “they remain lower after adjusting for inflation and rents. In our view, talk of another bubble is still premature.”

In a separate report, Black Knight, Jacksonville, Fla., said after six straight months of slowing growth, the rate of monthly appreciation shifted upward again in October.

The company’s monthly Home Price Index report said U.S. home prices gained 0.29 percent in October from September and increased by 6.48 percent from a year ago. At $283K, U.S. home prices reached another new peak in October, seeing 6.39 percent growth since the start of 2017

Black Knight said for the fourth month in a row, New York led all states in monthly appreciation, with home prices rising 0.98 percent from September. Home prices fell in eight states in October, with Alaska seeing the largest decline at -0.47 percent.

At the metro level, Black Knight said San Jose, Calif., continued to show very strong growth, leading all areas with 1.86 percent monthly appreciation; home prices there are up more than 17 percent year-over-year. Eleven of the nation’s 20 largest states and 12 of the 40 largest metros saw home prices hit new highs in October.

The report can be accessed at http://www.bkfs.com/CorporateInformation/NewsRoom/Pages/HPINow.aspx.