The S&P/Case-Shiller home price index for December posted a month-over-month decline of 0.1% on the 20-city composite index. It was unchanged on the 10-city index. The 20-city composite rose 13.4% year-over-year, slightly higher than the consensus estimate for a gain of 13.3%. The 10-city index rose 13.6% year-over-year in December.

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

Average home prices at the end of 2013 were back at their levels in the spring of 2004, even though the fourth-quarter average fell 0.3% sequentially. The sequential decrease in the 20-city index marks the second consecutive drop.

Compared with their peak in the summer of 2006, home prices on both indexes are down about 20%. Since the low of March 2012, home prices are up 23% to 24% on both the 10- and 20-city indexes.

The chairman of the S&P index committee said:

[G]ains are slowing from month-to-month and the strongest part of the recovery in home values may be over. Year-over-year values for the two monthly Composites weakened and the quarterly National Index barely improved. The seasonally adjusted data also exhibit some softness and loss of momentum. … Recent economic reports suggest a bleaker picture for housing. Existing home sales fell 5.1% in January from December to the slowest pace in over a year. Permits for new residential construction and housing starts were both down and below expectations. Some of the weakness reflects the cold weather in much of the country. However, higher home prices and mortgage rates are taking a toll on affordability. Mortgage default rates, as shown by the S&P/Experian Consumer Credit Default Index, are back to their pre-crisis levels but bank lending standards remain strict.

The Federal Housing Finance Agency (FHFA) reported this morning that U.S. home prices rose 0.8% sequentially in the month of December. Compared with December 2012, the house price index has gained 7.7%. The FHFA monthly index is calculated using purchase prices of houses with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac.

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