Case-Shiller: Recovery has Barely Reached First Base
As has been the case for some months the latest report from S&P/Case Shiller shows a continued slowing of home price increases. November results for both the 10-City and 20-City Composite Indices were lower on a year-over-year basis than in October. The National Home Price Index (HPI) eked out a slightly higher annual increase than reported the previous month.
The 10-City index gained 4.2 percent over its November 2013 match compared to an annual increase of 4.4 percent in October. The 20-City Composite was up 4.3 percent compared to October's growth of 4.5 percent. Nationally the November HPI was 4.7 percent higher than a year earlier compared to 4.6 percent October to October.
All 20 cities boasted year-over-year increases with the biggest changes in San Francisco with growth of 8.9 percent and Miami, up 8.6 percent. Dallas and Las Vegas each were 7.7 percent higher than in November 2013 and Denver was up 7.5 percent. Cleveland made the poorest showing at 0.6 percent while Minneapolis, New York, Phoenix, and Washington, DC all had annual gains under 2 percent.
On a monthly basis all three indices were "marginally negative." The 10-City index was down 0.3 percent from October and the 20-City lost 0.2 percent. The National Index dipped by 0.1 percent. Eight cities posted month-over-month losses with the largest in Chicago at -1.1 percent and Detroit with -0.9 percent. Tampa had the biggest increase at 0.8 percent followed by Miami at 0.5 percent.
"With the spring home buying season, and spring training, still a month or two away, the housing recovery is barely on first base," David Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices said. "Prospects for a home run in 2015 aren't good. Strong price gains are limited to California, Florida, the Pacific Northwest, Denver, and Dallas. Most of the rest of the country is lagging the national index gains. Moreover, these price patterns have been in place since last spring. Existing home sales were lower in 2014 than 2013, confirming these trends.
"Difficulties facing the housing recovery include continued low inventory levels and stiff mortgage qualification standards. Distressed sales and investor purchases for buy-to-rent declined somewhat in the fourth quarter. The best hope for housing is the rest of the economy where the news is better. 2014 was a good year for job creation and weekly unemployment claims - good short term indicators - which continue to provide upbeat reports. Consumer confidence, helped by cheap gasoline prices, is strong, and a good GDP number is expected this week," Blitzer said.
Average home prices in cities tracked by the 10-City and 20-City Composites had returned to autumn 2004 levels by the end of November. Measured from the June/July 2006 peaks the current decline of the two composites is approximately 16 to 17 percent and they have returned from the March trough by 28.2 percent for the 10-City Composite and 29.0 percent for the 20-City.
The S&P/Case Shiller Indices combine matched price pairs for thousands of houses from the available universe of arms-length sales data. The National HPI tracks the value of single-family houses within the nine U.S. Census divisions. The 10- and 20-City Indices are value-weighted averages of the 20 metropolitan area indices. The indices have a base value of 100 in January 2000 so a current index value of 150 indicates a 50 percent appreciation rate since that date for a typical home located in the subject market.
The Federal Housing Finance Agency (FHFA) earlier released its Home Price Index for November showing home prices were up 0.8 percent on a seasonally adjusted basis from October. October's previously reported 0.6 percent gain was revised down to 0.4 percent. On a year over year basis the index rose 5.3 percent. Home prices measured by FHFA are now at the approximately level of October 2005 and are 4.5 percent below the April 2007 peak.
Prices in all nine census divisions were positive on an annual basis and ranged from 1.6 percent in New England to 7.5 percent in the Pacific region. Eight of nine divisions were positive on a month over month basis as well. New England, down 0.9 percent, was the sole exception. The greatest appreciation was 1.8 percent in the East South Central Division.