Case-Shiller: Home prices still on the riseby Marcie Geffner
The Standard & Poor’s Case-Shiller Home Price Indices, a leading and respected measure of U.S. home prices, found prices rose a healthy 4.5 percent for the 10-city composite index and an even stronger 5.5 percent for the 20-city composite index for the 12 months ending November 2012.
Prices rose in 19 of the 20 cities with New York being the one exception. What’s more, prices in 19 cities rose faster in those 12 months than they had in the 12 months that ended on October 2012. Phoenix led the pack with the fastest increase, up 22.8 percent in 12 months, the seventh consecutive month of double-digit annual returns.
“Winter is usually a weak period for housing which explains why we now see about half the cities with falling month-to-month prices compared to 20 out of 20 seeing rising prices last summer,” David M. Blitzer, chairman of the S&P Dow Jones Indices Index Committee, said in a statement. “The better annual price changes also point to seasonal weakness rather than a reversal in the housing market.”
Regional patterns also were shifting. Las Vegas and Phoenix lead the way, with Miami and Tampa not far behind. California is also performing well, while price gains in the Northeast and Midwest have slowed somewhat.
Latest sales report
While the latest report on pending home sales declined 4.3 percent in December from the month prior, the index remains nearly 7 percent higher than year-ago levels. Fewer homes for sale are to blame for smaller sales figures in many parts of the country, according to the National Association of Realtors.
“The supply limitation appears to be the main factor holding back contract signings in the past month,” Lawrence Yun, NAR chief economist, said in a release. “Still, contract activity has risen for 20 straight months on a year-over-year basis.”
“Supplies of homes costing less than $100,000 are tight in much of the country, especially in the West, so first-time buyers have fewer options,” he said.
Lynn Franco, director of economic indicators at The Conference Board, which produces the Consumer Confidence Index, said in a statement that the recent sharp decline in confidence erased all of the gains made through 2012.
“Consumers are more pessimistic about the economic outlook and, in particular, their financial situation. The increase in the payroll tax has undoubtedly dampened consumers’ spirits and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock,” Franco said.
While consumer confidence is sure to play a big role as we enter the spring homebuying season, it isn’t as easy to predict how the recent sales and price reports will influence buyers and sellers in the coming months.
It’s clear that the limited housing inventory is serving to firm up prices, which is certainly encouraging to some sellers, but it’s unclear if buyers will be dismayed by bidding wars and a loss of market power.
The fact remains that many homeowners are still in a loss position, upside down on their mortgage or only at the heads-above-water breakeven point. Today’s prices are stronger, but aren’t close to the valuations homeowners enjoyed during the peak.