January Home Prices Maintain Rapid Climb

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The S&P CoreLogic Case-Shiller national home price index rose 6.2% year over year in January to a non-seasonally adjusted (NSA) index of 196.31. The month-over-month percentage increase was 0.05%.

In all U.S. cities included in the 20-city home price index January house prices increased year over year, and 19 of 20 also posted NSA month-over-month increases. Seattle (12.9%), Las Vegas (11.1%) and San Francisco (10.2%) posted the largest year-over-year gains. San Diego (0.8%) posted the largest month-over-month increase, followed closely by Atlanta, Denver and Seattle, all showing a 0.7% month-over-month gain. Washington, D.C., posted the only month-over-month decline, down 0.4%.

The S&P CoreLogic Case-Shiller NSA home price indexes for January increased by 6.4% year over year for the 20-city composite index and by 6% for the 10-city composite index.

Economists had estimated an NSA year-over-year gain in the 20-city index of 6.3%.

The index tracks prices on a three-month rolling average. January represents the three-month average of November, December and January prices.

Average home prices for December remain comparable to their levels in the winter of 2007.

The chairman of the S&P index committee, David M. Blitzer, said:

The home price surge continues. Since the market bottom in December 2012, the S&P Corelogic Case-Shiller National Home Price index has climbed at a 4.7% real – inflation adjusted – annual rate. That is twice the rate of economic growth as measured by the GDP. While price gains vary from city to city, there are few, if any, really weak spots. Seattle, up 12.9% in the last year, continues to see the largest gains, followed by Las Vegas up 11.1% over the same period. Even Chicago and Washington, the cities with the smallest price gains, saw a 2.4% annual increase in home prices.

Two factors supporting price increases are the low inventory of homes for sale and the low vacancy rate among owner-occupied housing. The current months-supply — how many months at the current sales rate would be needed to absorb homes currently for sale — is 3.4; the average since 2000 is 6.0 months, and the high in July 2010 was 11.9. Currently, the homeowner vacancy rate is 1.6% compared to an average of 2.1% since 2000; it peaked in 2010 at 2.7%. Despite limited supplies, rising prices, and higher mortgage rates, affordability is not a concern. Affordability measures published by the National Association of Realtors show that a family with a median income could comfortably afford a mortgage for a median priced home.

Compared to their peak in the summer of 2006, home prices on the 10-city and 20-city indexes remain down about 3.2% and 0.7%, respectively. Since the low of March 2012, home prices are up 49.6% and 53% on the 10-city and 20-city indexes, respectively. On the national index, home prices are now 6.3% above the July 2006 peak and 46.5% higher than their low-point in February 2012.

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