The recently released S&P/Case-Shiller Home Price Indices (HPI) outstripped analysts expectations with strong increases
in home prices over the 12 months ending in October. Both the 20-City and the 10-City showed
anticipated seasonal weaknesses in October itself, however and along with 12 of
the 20 cities, posted a monthly price decrease.
The 10-City Composite Index was up 3.4 percent on an
annual basis in October compared to 2.1 percent in September and the 20-City
Composite rose 4.3 percent compared to 3.0 percent. On a month-over-month basis both composites
declined 0.1 percent.
S&P/Case-Shiller presents most of its data on a non-seasonally
adjusted basis.
In 19 of the 20 cities the annual increase in October was
higher than that in September and only two cities, Chicago and New York, had
negative annual returns. The recovery
seems well established in some markets; for example Phoenix home prices increased for the 13th consecutive month and
San Diego for the ninth.
David M. Blitzer, Chairman of the
Index Committee at S&P Dow Jones Indices said, "The October monthly
numbers were weaker than September as 12 cities saw prices drop compared
to seven
the month before.
The five which turned down in October
but not in September, were Atlanta,
Dallas, Miami, Minneapolis and Seattle. Among all 20 cities, Chicago was
the weakest with prices dropping 1.5%, followed by Boston where
prices fell 1.4%. Las Vegas
saw the strongest one-month gain with prices up 2.8%.
"Annual rates of change in home prices are a better indicator of the performance of the housing market than the month-over-month changes,"
Blitzer said, "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 impact of the seasons can also be seen in the seasonally adjusted
data where only three cities declined month-to-month. 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."
Blitzer said it is clear that the
housing recovery is gathering strength.
Continued annual price gains and the strong performances in both the
southwest and in California, both of which were strongly affected by 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."
Even cities at the bottom are
showing gains. Detroit had a 24.2
percent annual increase even though prices there are still about 20 percent
lower than they were 12 years ago. Blitzer
also cited 22.5 percent and 22.1 percent increases in San Francisco and Phoenix
from their recent lows and prices "comfortably higher" than 12 years
ago.
As of October average home prices
nationwide were back to autumn 2003 levels. Measured from their
June/July 2006 peaks, the decline for both Composites is approximately
30% through October 2012 and approximately 35% from the June/July 2006
peak values to their
recent lows in early 2012. The October
2012 levels for both Composites
are about 8.4 to 9% above their early 2012 lows.
In October 2012, 12 MSAs and both Composites
posted negative month-over-month returns. Detroit,
Las Vegas, Los Angeles, Phoenix,
Portland, San Diego
and San Francisco were the only cities
that recorded positive monthly returns. Denver
remained flat.
The
S&P/Cash Shiller Home Price Index is a composite of single family home price indices for the nine U.S. Census divisions
and is calculated quarterly. The 10- and 20-City indices are weighted averages of
metropolitan area indices. Each index has a base value of 100 in January 2000.
