November Home Price Gains Barely Noticeable

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Home prices rose 11.8% in November, compared with the same month a year ago, for a 21st consecutive monthly year-over-year gain, according to research firm CoreLogic. Home prices rose 0.1% from October to November. The data include sales of distressed properties, and the index is a non-seasonally adjusted three-month weighted average.

Excluding distressed sales, November prices rose 0.3% compared with October, and the year-over-year price rose by 10.4%. Home prices remain 17.6% below their April 2006 peak when distressed sales are counted, and 13.3% below the peak when distressed sales are excluded.

In the month of November, homebuilder stocks peaked late in the month before sliding a bit. Toll Brothers Inc. (NYSE: TOL) posted a monthly gain of about 3.7%, PulteGroup Inc. (NYSE: PHM) rose 6.3% and D.R. Horton Inc. (NYSE: DHI) posted a monthly gain of 4.9%. Homebuilding stock gains once more outpaced home improvement stock gains. Home Depot Inc. (NYSE: HD) was up about 3.6% and Lowe’s Companies Inc. (NYSE: LOW) saw its stock price slip by 4.6%.

CoreLogic expects December housing prices to rise by 11.5% year-over-year and to drop by 0.1% month-over-month. Excluding distressed sales, CoreLogic’s year-over-year increase for December is forecast at 10.6% and the month-over-month estimate is forecast to rise by 0.2%.

CoreLogic executives noted:

Our pending [house price index] projects that home prices will grow by 11.5 percent for the full year 2013. That will make 2013 the best year for home-price appreciation since 2005. … The outlook for 2014 looks a bit less robust as regulatory complexities and tight credit can be expected to cool the housing market.

Including distressed sales, November year-over-year home prices rose the most in Nevada (prices up 25.3%), California (21.3%), Michigan (14.4%), Arizona (13.5%) and Georgia (13.3%). The states with the smallest gains were Arkansas (-1.1%), New Mexico (0.3%), Mississippi (0.7%), Kentucky (0.8%) and Vermont (1.4%). Only Arkansas experienced a year-over-year price decline in November, and 21 states and the District of Columbia are now within 10% of their home price peaks.

Home price gains have definitely tapered off month-over-month, although yearly gains continue strong. There shouldn’t be much month-over-month change in home prices for the next few months, and we may even begin to see declines from the strong numbers posted in early 2013.