Status Quo: 5-6% Annual Home Price Gains


The headline of the SP CoreLogic
Case-Shiller Indices press release for the last three months has been exactly
numbers haven’t changed much either.

The newest results, released on Tuesday,
show the National Index, which covers the nine U.S. Census divisions, up 5.6
for the 12 months ended in November. 
The October to October gain was revised to 5.5 percent from the 5.6
percent originally reported. On a month-over-month basis the National Index
rose 0.2 percent on a non-seasonally adjusted basis and 0.8 percent after



The 10-City Composite increased by 4.5
percent on an annual basis compared to 4.3 percent in October and the 20-City
Composite gained 5.3 percent, up from 5.2 percent a month earlier.  Among the 20 cities the leaders were again
Seattle, Portland, and Denver with increases of 10.4 percent, 10.1 percent and
8.7 percent respectively.  Eight cities
saw higher annual appreciation in November than in October. 

Before seasonal adjustment both Composites
were up 0.2 percent and each gained 0.9 percent after adjustment. Ten of the 20
cities reported increases on an unadjusted basis; all 20 did so after adjustment.

Analysts estimates as compiled by Econoday are based on the 20-City
Composite.  Those were in a range of 0.4
to 0.8 for the seasonally adjusted gain, with a consensus of 0.7.  The actual number for annual appreciation was
above the range of 5.0 to 5.4 percent with a consensus of 5.0 percent.

David M. Blitzer, Managing Director and
Chairman of the Index Committee at SP Dow Jones Indices presented the
following analysis of the data.

“With the SP CoreLogic Case-Shiller
National Home Price Index rising at about 5.5% annual rate over the last
two-and-a-half years and having reached a new all-time high recently, one can
argue that housing has recovered from the boom-bust cycle that began a dozen
years ago,” says “The recovery has been supported by a few economic factors:
low interest rates, falling unemployment, and consistent gains in per-capita
disposable personal income. Thirty-year fixed rate mortgages dropped under 4.5%
in 2011 and have only recently shown hints of rising above that level. The
unemployment rate at 4.7% is close to the Fed’s full employment target.
Inflation adjusted per capita personal disposable income has risen at about a
2.5% annual rate for 30 months.

“The home prices and economic data are
from late 2016. The new Administration in Washington is seeking faster economic
growth, increased investment in infrastructure, and changes in tax policy which
could affect housing and home prices. Mortgage rates have increased since the
election and stronger economic growth could push them higher. Further gains in
personal income and employment may increase the demand for housing and add to
price pressures when home prices are already rising about twice as fast as

The November National Index shows prices
now up 0.3 percent above the peak reached in July 2006.  Average home prices for the metropolitan
statistical areas within the 10 and 20-City Composites are back to their winter
2007 levels.  The 10-City Composite
remains 9.0 percent below its 2006 peak and the 20-City is off by 7.0 percent.



The SP CoreLogic 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 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 National Index in September was at 185.23
compared to 185.06 in October.  The 10-
and 20-City Composites had readings of 205.94 and 192.14 respectively.  Los Angeles has the highest index reading at
252.61 and Detroit the lowest at 110.04.

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