S&P/Case-Shiller: Home Prices Closed Out a Strong 2012

Data through December 2012, released today by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended the year with strong gains. The national composite posted an increase of 7.3 percent for 2012. The 10- and 20-City Composites reported annual returns of 5.9 percent and 6.8 percent in 2012. Month over- month, both the 10- and 20-City Composites moved into positive territory with gains of 0.2%; more than reversing last month’s losses.

In addition to the three composites, nineteen of the 20 MSAs posted positive year-over-year growth – only New York fell.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 7.3 percent gain in the fourth quarter of 2012 over the fourth quarter of 2011. In December 2012, the 10- and 20-City Composites posted annual increases of 5.9 percent and 6.8 percent, respectively.

“Home prices ended 2012 with solid gains,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Housing and residential construction led the economy in the 2012 fourth quarter.

In December’s report all three headline composites and 19 of the 20 cities gained over their levels of a year ago. Month-over-month, 9 cities and both Composites posted positive monthly gains. Seasonally adjusted, there were no monthly declines across all 20 cities.

“The National Composite increased 7.3 percent over the four quarters of 2012. From its low in the first quarter, it surged in the second and third quarter and slipped slightly in the 2012 fourth period. The 10- and 20-City Composites, which bottomed out in March 2012 continued to show both year-over-year and monthly gains in December. These movements, combined with other housing data, suggest that while housing is on the upswing some of the strongest numbers may have already been seen.

“Atlanta and Detroit posted their biggest year-over-year increases of 9.9 percent and 13.6 percent since the start of their indices in January 1991. Dallas, Denver, and Minneapolis recorded their largest annual increases since 2001. Phoenix continued its climb, posting an impressive year-over-year return of 23.0 percent; it posted eight consecutive months of double-digit annual growth.”

As of December 2012, average home prices across the United States for the 10-City and 20-City Composites are back to their autumn 2003 levels. Measured from their June/July 2006 peaks, the decline for both Composites is approximately 30 percent through December 2012. For both Composites, the December 2012 levels are approximately 8-9 percent above their recent lows seen in March 2012.

In December 2012, nine MSAs and both Composites posted positive monthly gains, led by Las Vegas with an increase of 1.8 percent. Eleven cities declined with Chicago posting the largest negative monthly return of 0.7 percent.

Atlanta and Detroit remain the only three cities with average home prices below their January 2000 levels. Detroit with an 80.04 print is 20 percent below its January 2000 level.

“The high end of the market is doing well and while it’s a fashionable thing to say that it is because of foreign money, I suspect the actual reason is that the one percent have gotten 122 percent of the recovery,” says USC Lusk Center for Real Estate Director, Richard Green. “Since the low end of the market is being targeted by investors, it’s the middle market that needs help – particularly in the form of higher income – if it is going to have a sustained recovery.”

For more information, visit www.homeprice.standardandpoors.com.

New Home Sales Hold Steady in October

English: New home construction in Rumson, New ...The Census Bureau and HUD reported October new home sales at a seasonally-adjusted annual level of 368,000, which is virtually the same as the three previous months. A 32 percent drop in sales in the Northeast was likely a result of the threat and ultimate impact of the storm named Sandy.

Inventories rose 2,000 to 147,000, which remains at a very low level but shows some promise that builders are able to begin restocking. The month’s supply was 4.8, well below an industry standard of 6 months.

Median home prices increased 5.7 percent and average prices rose 8 percent from October of last year. The rise is likely a dual effect of rising building costs and a continuation of a compositional effect. Recent homebuyers are those that can obtain a mortgage and the tight credit standards are making it less likely for moderate income households to qualify while higher income households are able to make it through the more restrictive thresholds.

Regionally, sales were up in the Midwest and West both month-to-month as well as comparing the October level to the third quarter average, which adjusts for typical unusual monthly movements. Sales were down in the South to 176,000 but the August level was unusually high. The three-month moving average still stands at 184,000, which is within a 3 percent range of the monthly levels from April to August 2012. The Northeast fell 32 percent but the monthly level of 21,000 was well below the three-month moving average as far back as February 2012.

On an annual basis, October sales were up 17.2 percent from one year earlier and continue to support an expected 22 percent increase in annual sales for 2012 over 2011. New home sales will continue to rise at this modest pace as the pent up demand is released and as the policy uncertainties at the end of 2012 are resolved.

To view this article on the NAHB blog, Eye on Housing, click here.

 

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November 2012 U.S. Economic And Housing Market Outlook

Freddie Mac recently released its U.S. Economic and Housing Market Outlook for November showing what a healthy national housing market should look like taking into account recent trends, key housing indicators and the shifting demographic patterns that will define a new and realistic trajectory over the next five years. A healthy housing market should have activity below the levels recorded during the peaks of the prior decade.

Outlook highlights – what a healthy housing market should look like:

  • Housing starts increasing to about 1.7 to 1.8 million dwellings per year compared with 2.1 million in 2005.
  • Home sales increasing to about 5 percent of the housing stock, or about 6.5 to 7.0 million homes per year, compared with sales of 7 percent of the stock in 2005.
  • U.S. house price appreciation rising gradually to about 3 percent per year compared to 11 percent of 2005.
  • Vacancy rates easing further to about 1.7 percent on for-sale homes and 8 percent for rental homes, down from peaks of about 3 percent in 2008 and 11 percent in 2009, respectively.
  • Serious delinquency rates nearing 2 percent, down from a peak of 9.5 percent in early 2010.
  • “What a healthy housing market should look like will dismay those who keep comparing housing to what it was during its peak years,” explains Frank Nothaft, Freddie Mac, vice president and chief economist, However, taking into account recent trends, key housing indicators and the shifting demographic patterns that will define a new and realistic trajectory toward a healthy housing market, the long-term prognosis is promising – just don’t expect the housing market to wake up at 98.6 degrees tomorrow morning.”

Source: Freddie Mac

Pace of New-Home Sales Holds Steady in August

AZUSA, CA - NOVEMBER 24:  A construction worke...

Following a substantial gain in July, the pace of new-home sales held virtually unchanged at a seasonally adjusted annual rate of 373,000 units in August, according to newly released figures from HUD and the U.S. Census Bureau.

“New-home sales in August effectively tied the pace they set in the previous month, when they were the strongest we’ve seen in more than two years — so this is really a continuation of the good news we’ve been getting on the housing front,” says Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “Looking at the big picture, sales have been trending gradually upward since the middle of last year as favorable interest rates and prices have driven more consumers to get back in the market for a newly built home.” Continue reading