S&P Dow Jones Indices recently released the latest results for the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices. Data released for April 2015 show that home prices continued their rise across the country over the last 12 months.
Year-over-Year
Both Composites and the National index showed slightly lower year-over-year gains compared to last month. The 10-City Composite gained 4.6 percent year-over-year, while the 20-City Composite gained 4.9 percent year-over-year. The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a 4.2 percent annual gain in April 2015 versus a 4.3 percent increase in March 2015.
Denver and San Francisco reported the highest year-over-year gains with price increases of 10.3 percent and 10.0 percent, respectively, over the last 12 months. Dallas reported an 8.8 percent year-over-year gain to round out the top three cities. Nine cities reported faster price increases in the year ended April 2015 over the year ended March 2015. Las Vegas prices rose 6.3 percent in the year to April versus 5.7 percent in the year to March 2015. In 11 cities, however, the rate of annual price gains slowed. Boston home prices were up 1.8 percent in the 12 months ending in April compared to a 4.6 percent gain in the 12 months ending in March 2015.
Month-over-Month
Before seasonal adjustment, the National index increased 1.1 percent in April and the 10-City and 20-City Composites posted gains of 1.0 percent and 1.1 percent month-over-month. After seasonal adjustment, the National index was unchanged; the 10- and 20-city composites were up 0.4 percent and 0.3 percent. All 20 cities reported increases in April before seasonal adjustment; after seasonal adjustment, 12 were up and eight were down.
“Home prices continue to rise across the country, but the pace is not accelerating,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Moreover, consumer expectations are consistent with the current pace of price increases. A recent national survey published by the New York Fed showed the average expected price increase among both owners and renters is 4.1 percent. Both the current rate of home price increases and the consumers’ expectations are a bit lower than the long term annual price change of 4.9 percent since 1975. These figures, however, do not adjust for inflation. The real, or inflation adjusted, price change since 1975 is one percent per year. Given the current inflation rate of under two percent, real home prices today are rising more quickly than is typical. The three out of five consumers in the survey who see home ownership as a good or somewhat good investment may be thinking in real terms.
“Recent housing data is positive. Sales of new and existing homes are rising in recent reports and construction of new homes enjoyed strong gains in May. At the same time, the proportion of new construction that is apartments rather than single family homes remains high. In the past year, 34 percent of housing starts were apartments, compared to 22 percent on average since 1975. One aspect of this may be condominiums. ”
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