|Las Vegas||8.4%||March 2006|
The S&P/Case-Shiller Home Price Indices report for October was released this morning, here are some highlights:
1. “Annual rates of change in home prices are a better indicator of the performance of the housing market than the month-over-month changes because home prices tend to be lower in fall and winter than in spring and summer. Both the 10- and 20-City Composites and 19 of 20 cities recorded higher annual returns in October 2012 than in September. The 10-City Composite annual rate of +3.4% in October was lower than the 20-City Composite annual figure of +4.3% because the two weaker cities – Chicago and New York – have higher weights in the 10-City Composite.”
2. “Looking over this report, and considering other data on housing starts and sales, it is clear that the housing recovery is gathering strength. Higher year-over-year price gains plus strong performances in the southwest and California, regions that suffered during the housing bust, confirm that housing is now contributing to the economy. Last week’s final revision to third quarter GDP growth showed that housing represented 10% of the growth while accounting for less than 3% of GDP.”
3. The table above shows the 11 metro areas in the Case-Shiller Composite-20 Index where the annual gain in home prices in October was the highest year-over-year increase since before the recession started in December 2007. Eight of the metro areas experienced higher annual returns in home prices in October of this year than in any month since October 2006 or before. The 6.9% increase in Denver home prices in October was the highest annual return in more than a decade, and the 10% October increase in Detroit home prices was the highest on record for Case-Shiller data going back to 1991 for the Motor City. Most of the other nine metro areas in the Composite-20 index experienced artificially high annual returns in home prices during the summer of 2010 due to the first-time home buyer credit, but it’s noteworthy that the 11 cities above all had higher annual gains in October home prices this year than even during that period.
MP: It should be noted that the Case-Shiller index is actually a lagging indicator of U.S. home prices and the October indices are based on a three-month moving average of home prices from August-October, released with a two-month lag. More recent reports of home prices for home sold in November for: a) Case-Shiller metro areas like Miami (where the median price for condos sold in November surged by 31.7% and the median price for single-family homes increased 16%) and Minneapolis (where the median price in November increased by 17%), and b) entire states like Florida (where the median price increased 10.6% in November), and c) the national housing market (the November median sales price increased by 10.1%), all suggest that the Case-Shiller price indices will continue to show increases in U.S. home prices through the rest of this year and into next year as well.