U.S. home prices continue to escalate, with average home prices tied to the 10- and 20-city composite indices increasing 2.5% and 2.4% from April to May, according to the S&P/Case-Shiller Home Price Indices report.
The May index is especially significant as it marks the first time any city has reached a new all-time price high. Dallas and Denver reached record levels, passing their pre-financial crisis peaks that were set in June 2007 and August 2006.
All 20 cities jumped year-over-year in May, with the 10- and 20-city composites posting their best-year-over-year gains since March 2006.
“Home prices continue to strengthen,” says David Blitzer, chairman of the index committee at S&P Dow Jones Indices. “Two cities set new highs, surpassing their pre-crisis levels and five cities” Atlanta, Chicago, San Diego, San Francisco and Seattle “posted monthly gains of over 3%, also a first time event.”
The strongest annual gains belonged to the Southwest and the West. San Francisco’s home prices spiked 24.5% since last May, while Las Vegas was up 23.3% and Phoenix rose 20.6%. Conversely, New York, Cleveland and Washington D.C. were the weakest, up only 3.3%, 3.4% and 6.5% year-over-year, respectively.
Although Atlanta and Phoenix continued to show impressive improvement, their May annual rate dropped to just over 20% compared to April. Detroit saw the most deceleration with a three-percentage point drop.
Month-over-month, before seasonal adjustment, all 20 cities experienced rising prices. On a monthly basis, San Francisco experienced a significant price jump, up 4.3% from April to May. Chicago and Atlanta followed with increases of 3.7% and 3.4%, respectively. Miami and Seattle reported their greatest monthly increases since August 2005 and April 1990.
Surprisingly, Cleveland and Minneapolis dropped slightly after a seasonal adjustment.
“The overall report points to some shifts among various markets: Washington D.C. is no longer the standout leader and the eastern Sunbelt cities, Miami and Tampa, are lagging behind their western counterparts,” said Blitzer.
“Home price appreciation is a major plus that’s lifting consumer spirits and the economic outlook,” analysts at Econoday noted.
According to Zillow ($71.14 -2.84%) Senior Economist Svenja Gudell, however, three straight months of national home value appreciation above 10% is not normal, not sustainable and not very believable.
“As the overall housing market continues to improve, the impact of foreclosure re-sales on the Case-Shiller indices continues to be pronounced, as homes previously sold under duress trade again under more normal circumstances, leading to inflated and misleading markups in price,” said Gudell.
“It’s increasingly critical that the average American homeowner not read numbers like today’s Case-Shiller results and assume their homes must also have appreciated at these levels over the past year, or will continue to appreciate at these levels going forward. In reality, typical home values have appreciated at roughly half this pace for the past several months, which is still very robust. Looking ahead, a combination of rising mortgage interest rates, flagging investor demand and more inventory entering the market will all help to moderate the pace of home value appreciation and stabilize the market,” he added.
The author of this article is: Megan Hopkins
See the original post at: http://www.housingwire.com/news/2013/07/30/spcase-shiller-two-cities-post-all-time-price-highs
