Home-Price Growth at 6-Year High
Washington — U.S. home prices edged up in January to make the year-on-year improvement the fastest in more than six years, according to data released last week.
The S&P/Case-Shiller 20-city composite index nudged up 0.1 percent to take the year-on-year gain to 8.1 percent. The level is the highest since September 2010, and the growth rate is the strongest since June 2006.
On a seasonally adjusted basis, prices rose by 1 percent in January, S&P added.
The news fits with other economic reports showing a rebound in the housing market since the bubble burst during the last recession. Sales and construction activity also have improved, helped by low mortgage rates, diminished foreclosures and a slowly improving jobs market.
But home prices remain about a third below their prerecession peak and are about where they were 10 years ago.
“Gradually improving demand and lower inventory levels continue to support price gains on average across the U.S., with little evidence from today’s numbers that the advance in prices is slowing,” Andrew Grantham of CIBC WM Economics said in a note to clients.
Joshua Shapiro, chief U.S. economist at MFR Inc., frets that supply could keep a lid on prices.
“While recent results have been considerably better than those seen earlier in the cycle, we continue to believe that the large supply overhang of existing homes (factoring in all those in foreclosure or soon to be) promises to keep pressure on prices for some time,” he said in a note to clients.
CoreLogic separately reported that there is a shadow inventory of 2 million homes, which is about the same supply as homes on the market.
On a year-over-year basis, all 20 cities measured by the Case-Shiller index improved, led by a 23.2 percent surge in Phoenix, with New York bringing up the rear with a 0.6 percent advance.
On a monthly basis, the results were more varied, with nine cities seeing gains, Dallas remaining flat, and prices in 10 cities slipping. Las Vegas led the way with a 1.6 percent improvement, while Chicago and Detroit prices both dropped by 0.9 percent.
Phoenix, Las Vegas and San Francisco, which had the strongest year-on-year gains, all were hit hard by the housing bust, pointed out David Blitzer, chairman of the index committee at S&P Dow Jones Indices.
There are other home-price measurements, though Case-Shiller is widely regarded as one of the more accurate measures.
Each release includes three months of sales data, making it less volatile than other gauges.
Separately, sales of new homes dropped sharply in February, though they are about 12 percent stronger than the same period of 2012, the Commerce Department said Tuesday. (See related story, below.)
As part of the Conference Board consumer confidence report, the percentage of respondents who plan to buy a home within six months rose to 5.6 percent in March from 3.8 percent in February, which is the highest percentage since November.