Housing

December Home Prices Drop Most in Chicago and Cleveland

Housing Patterns
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In 10 of 20 U.S. cities included in the S&P/Case-Shiller home price index, December house prices increased. They remained unchanged in four cities and dropped in six others. House prices dropped the most in Chicago, where they tumbled 0.9% compared with the November index, which was 1% lower than the October index. House prices have increased just 1.3% year-over-year in Chicago, the smallest increase among the 20 cities.

The S&P/Case-Shiller home price index for December increased by 4.5% year-over-year for the 20-city composite index and by 4.3% for the 10-city composite index. The national index rose 4.6% year-over-year, compared to a 4.7% gain in November. The consensus estimate for the 20-city year-over-year index called for growth of 4.2%.

Month over month, both the 10-city and the 20-city indexes increased by 0.1%, while the national index fell by 0.1%.

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 for December remain at their levels in the autumn of 2004.

Compared with their peak in the summer of 2006, home prices on both indexes remain down about 16% to 17%. Since the low of March 2012, home prices are up 28.2% and 29.1% on the 10- and 20-city indexes, respectively. Recovery levels are essentially flat compared with November 2014 levels.

All 20 cities in the index posted year-over-year gains. In six cities the month-over-month change was negative: Chicago (down 0.9%), Cleveland (0.5%), Las Vegas (0.3%), Minneapolis (0.3%), Boston (0.2%) and San Diego (0.2%).

The largest month-over-month gains came in Miami, which was up 0.7%, and Denver, up 0.5%.

Year-over-year house price changes in December were smallest in Cleveland (up 0.6%), Minneapolis (1.5%) and New York (1.5%).

The chairman of the S&P index committee said:

The housing recovery is faltering. While prices and sales of existing homes are close to normal, construction and new home sales remain weak. Before the current business cycle, any time housing starts were at their current level of about one million at annual rates, the economy was in a recession. The softness in housing is despite favorable conditions elsewhere in the economy: strong job growth, a declining unemployment rate, continued low interest rates and positive consumer confidence.

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