March Home Prices Continue Racing Higher

The S&P CoreLogic Case-Shiller national home price index rose 6.5% year over year in March to a non-seasonally adjusted (NSA) index of 198.94. The month-over-month percentage increase was 0.8.

In all U.S. cities included in the 20-city home price index, March house prices increased year over year, and all 20 also posted NSA month-over-month increases. Seattle (up 13%), Las Vegas (up 12.4%) and San Francisco (up 11.3%) posted the largest year-over-year gains. Seattle (up 2.8%) posted the largest month-over-month increase, followed by San Francisco (2.1%) and Minneapolis (1.7%). New York posted the smallest month-over-month gain, up just 0.1%.

The S&P CoreLogic Case-Shiller NSA home price indexes for March increased by 6.8% year over year for the 20-city composite index and by 6.5% for the 10-city composite index. Economists had estimated an NSA year-over-year gain in the 20-city index of 6.4%.

The Case-Shiller index tracks prices on a three-month rolling average. March represents the three-month average of January, February and March prices.

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

The S&P index committee chair, David M. Blitzer, said:

Any doubts that real, or inflation-adjusted, home prices are climbing rapidly are eliminated by considering Chicago; the city reported the lowest 12-month gain among all cities in the index of 2.8%, almost a percentage point ahead of the inflation rate.

Looking across various national statistics on sales of new or existing homes, permits for new construction, and financing terms, two figures that stand out are rapidly rising home prices and low inventories of existing homes for sale. Months-supply, which combines inventory levels and sales, is currently at 3.8 months, lower than the levels of the 1990s, before the housing boom and bust. Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising. Compared to the price gains of the last boom in the early 2000s, things are calmer today. Gains in the National Index peaked at 14.5% in September 2005, more quickly than Seattle is rising now.

Compared to their peak in the summer of 2006, home prices on the 10-city index remain down 1.7%. On the 20-City index home prices are now 1% higher. Since the low of March 2012, home prices are up 51.9% and 55.6% on the 10- and 20-city indexes, respectively. On the national index, home prices are now 7.8% above the July 2006 peak and 48.5% higher than their low-point in February 2012.

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