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Home Price Gains Prepping for Resurgence?

by devteam December 30th, 2014 | Share

In its reportrnfor October S&P Dow Jones again points to the slowing acceleration of homernprices through much of the U.S., but this time said there are indications that decelerationrnmay be nearing an end.  All three of therncompany’s Case-Shiller Home Price Indices (HPIs) showed smaller levels of appreciation</bfrom October 2013 to October 2014 than they had shown year-over-year inrnSeptember but a substantial subset of metropolitan areas within those indices reportedrngrowing gains.  </p

The 10-CityrnComposite HPI increased 4.4 percent compared to the previous October where thernannual gain in September had been 4.7 percent. rnThe 20-City Composite was up 4.5 percent from a year earlier compared torn4.8 percent the prior month.  ThernCase-Shiller U.S. National HPI which covers the nine census divisions increasedrnby 4.6 percent, 2 basis points less than the gain in September.  </p

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Eight citiesrnbucked the national trend, showing greater annual appreciation in October thanrnin September.  These included SanrnFrancisco, Denver, and Tampa.  Therngreatest depreciation over the last year was in Las Vegas where the HPI wasrndown 1.2 percent. </p

All threernindices were also down on a month-over-month basis.  Both the 10- and 20-City Composites were 0.1rnpercent below their September level while the National Index lost 0.2rnpercent.  San Francisco and Tampa gainedrn0.8 percent each while Chicago and Cleveland had monthly decreases of 1.0 percentrnand 0.7 percent respectively. Overall the 20 cities reported mixed results, tenrnhad lower figures, eight reported increases and two were unchanged.  </p

“After a long period when home prices rose, but at a slower pace with each passing month, we arernseeing hints that prices couldrnend 2014 on a strongrnnote and accelerate into 2015,” says David M. Blitzer, Managing Director andrnChairman of the Index Committee at S&P Dow Jones Indices. “Two months ago, all 20 cities werernexperiencing weakening annual price increases. Last month 18 experiencedrnweakness. This time, 12 cities had weaker annual price growth, but eight sawrnthe pace of price gains pick up.  Seasonally adjusted, all 20 cities had higherrnprices than a month ago.</p

“Most national economic statistics, other than those connected to housing, posted positive reports inrnNovember and early December. Third quarter GDP was revisedrnto 5% real growth at annual rates, andrnunemployment was at 5.8% as payrolls addedrnover 300,000 jobs in November. Housing was somber: housing starts pulled back 1.6%, existing home sales were at 4.93 million, down 6.1%, and newrnhome sales were 438,000, down 1.6%, all in November.”</p

Average home prices in thern10- and 20-City Composite Indices are back to their autumn 2004 levels and arerndown 16 to 17 percent from the peaks they reached in June or July 2006.  The recovery from the March 2012 lows arern28.5% and 29.3% for the 10-City and 20-City Compositesrnrespectively.</p

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The S&P Case-Shiller HPIsrnare constructed to track the prices of typical single-family homes in each ofrnthe cities in their sample.  Each indexrncombines matched price pairs for thousandsrnof individual houses from the available universe of arms-length sales data. The S&P/Case-Shiller National U.S.rnHome Price Index tracks the value of single-family housing within the UnitedrnStates. The indices have a base value of 100 in January 2000; thus,rnfor example, a current index value of 150 translates to a 50% appreciation rate since January 2000 for a typical homernlocated within the subject market.

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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