November Home Prices Marching Higher: Case-Shiller

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The S&P CoreLogic Case-Shiller national home price index for November rose to 6.2% year over year to a non-seasonally adjusted (NSA) index of 195.94. The month-over-month percentage increase was 0.2%.

In all 20 U.S. cities included in the 20-city home price index, November house prices increased year over year, and 13 of 20 also posted NSA month-over-month increases. Seattle (12.7%), Las Vegas (10.6%) and San Francisco (9.1%) posted the largest year-over-year gains. San Francisco (1.4%) and Tampa (1.0%) posted the largest month-over-month increases, while Chicago and Cleveland posted 0.4% month-over-month declines, and Charlotte, Detroit and San Diego posted drops of 0.3% compared to October.

The S&P CoreLogic Case-Shiller NSA home price indexes for November increased by 6.4% year over year for the 20-city composite index and by 6.1% for the 10-city composite index.

Economists had estimated an NSA year-over-year gain in the 20-city index of 6.4%. The NSA monthly gain of 0.2% came in at the consensus estimate.

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

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

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

Home prices continue to rise three times faster than the rate of inflation. The S&P CoreLogic Case-Shiller National Index year-over-year increases have been 5% or more for 16 months; the 20-City index has climbed at this pace for 28 months. Given slow population and income growth since the financial crisis, demand is not the primary factor in rising home prices. Construction costs, as measured by National Income and Product Accounts, recovered after the financial crisis, increasing between 2% and 4% annually, but do not explain all of the home price gains. From 2010 to the latest month of data, the construction of single family homes slowed, with single family home starts averaging 632,000 annually. This is less than the annual rate during the 2007-2009 financial crisis of 698,000, which is far less than the long-term average of slightly more than one million annually from 1959 to 2000 and 1.5 million during the 2001-2006 boom years. Without more supply, home prices may continue to substantially outpace inflation.

Looking across the 20 cities covered here, those that enjoyed the fastest price increases before the 2007-2009 financial crisis are again among those cities experiencing the largest gains. San Diego, Los Angeles, Miami and Las Vegas, price leaders in the boom before the crisis, are again seeing strong price gains. They have been joined by three cities where prices were above average during the financial crisis and continue to rise rapidly – Dallas, Portland OR, and Seattle.

Compared to their peak in the summer of 2006, home prices on the 10-city and 20-city indexes remain down about 3.6% and 1.1%, respectively. Since the low of March 2012, home prices are up 49% and 52.3% on the 10-city and 20-city indexes, respectively. On the national index, home prices are now 6.1% above the July 2006 peak and 46.2% higher than their low-point in February 2012.