Home Prices still Defying Predictions


No matter how much it is predicted, home
price gains are still failing to decelerate. 
All three of the SP/Case-Shiller indices were slightly higher on an
annual basis in November than they were in October and the Federal Housing
Finance Agency’s (FHFA’s) Home Price Index (HPI) recorded a greater year-over-year
increase in November 2015 than it did in November 2014.  

The SP/Case Shiller U.S. National Home
Price Index, covering all nine U.S. census divisions rose 5.3 percent in
November compared to 5.1 percent in October. 
The Case-Shiller 10-City Composite posted a 5.3 percent increase
compared to a 12 month gain of 5.0 percent in October while the 20-City
Composite was up 5.8 percent versus 5.5 percent the previous month.

FHFA reported home prices rose 5.9 percent
on a seasonally adjusted annual basis. 
The annual increase a year earlier was 5.4 percent.

Case-Shiller reported the highest annual
were again in Portland, San Francisco, and Denver; prices in all three
rose by double digits.  Portland was up
11.1 percent, San Francisco 11.0, and Denver 10.9 percent.  Fourteen cities reported higher annual price gains
in November than in October while Phoenix extended its streak of 12-month increases
to a full year. Even beleaguered Detroit improved, posting a 6.3 percent annual
gain compared to 5.1 percent in October.

The three Case Shiller indices also rose
significantly month-over-month on a seasonally adjusted basis, each rising 0.9
percent compared to October.  On a
non-seasonally adjusted basis the National Index was up 0.1 percent as was the
20-City composite while the 10-City was unchanged.  Fourteen of the 20 cities tracked by the
indices had monthly increases before seasonal adjustment; all improved on an
adjusted basis.

M. Blitzer, Managing Director and Chairman of the SP Dow Jones Index
Committee said, “Home prices extended their gains, supported by continued low mortgage
rates, tight supplies and an improving labor market.  Sales of existing homes were up 6.5 percent in
2015 vs. 2014, and the number of homes on the market averaged about a 4.8 months’
supply during the year; both numbers suggest a seller’s market. The consumer portion
of the economy is doing well; like housing, automobile sales were quite strong last
year. Other parts of the economy are not faring as well. Businesses in the oil and
energy sectors are suffering from the 75% drop in oil prices in the last 18 months.
Moreover, the strong U.S. dollar is slowing exports. Housing is not large enough
to offset all of these weak spots.



“Home prices continue to recover from the collapse
that began before the recession of 2007-2009 and continued until 2012. Three cities
– Dallas, Denver and Portland, Oregon – have reached new all-time highs; San Francisco
is even with its earlier peak and Charlotte, North Carolina is less than one percent
below its previous peak. The SP/Case-Shiller National Home Price Index is about
4.8 percent below the peak it set in July 2006, and 29.2 percent above the bottom
it touched in January 2012. By comparison, the SP 500 as of Friday, January
22nd is up 46 percent from January 2012 – better than the SP/Case-Shiller National
Home Price series and about the same as Los Angeles. The chart shows how far the
20 cities have rebounded from the National Index bottom.”



SP/Case-Shiller Home Price Indices are constructed to accurately track the
price path of typical single-family home pairs for thousands of individual
houses from the available universe of arms-length sales data. The
SP/Case-Shiller National U.S. Home Price Index tracks the value of
single-family housing within the United States. The indices have a base value
of 100 in January 2000; thus, for example, a current index value of 150
translates to a 50 percent appreciation rate since January 2000 for a typical
home located within the subject market.

The 10-City
Composite currently has an index level of 197.54 and the 20-City a value of
182.86.  The National Index is at 175.71.  Detroit has the lowest index value at 103.40
and Los Angeles has the highest at 239.83.

FHFA’s national HPI for November was up
0.5 compared to October on a seasonally adjusted basis, the same percentage
increase as posted from September to October. Six of the nine census divisions
had increases, the highest, in the Mountain Division, was 1.8 percent while the
largest loss was in the West South Central division at 0.4 percent. 

All nine divisions were in positive
territory on an annual basis with the largest increase again in the Mountain
division at 10.0 percent and the Middle Atlantic division with the smallest
gain at 2.6 percent.  In seven of the
nine divisions the annual increases in November were higher than those a year



The FHFA monthly HPI is calculated using home
sales price information from mortgages sold to, or guaranteed by, Fannie Mae
and Freddie Mac. 

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