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January 29, 2013

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Home Prices Extend Gains - According to the S&P/Case-Shiller Home Price Indices

Standardandpoors.com

Data through November 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 home prices rose 4.5% for the 10-City Composite and 5.5% for the 20-City Composite in the 12 months ending in November 2012. 

In the 12 months ended in November, prices rose in 19 of the 20 cities and fell in New York.  In 19 cities prices faster in the 12 months to November than in the 12 months to October; Cleveland prices rose at the same pace in both time periods.  Phoenix led with the fastest price rise – up 22.8% in 12 months as it posted its seventh consecutive month of double-digit annual returns.  

The chart above depicts the annual returns of the 10-City Composite and the 20-City Composite Home Price Indices. In November 2012, the 10- and 20-City Composites posted respective annual increases of 4.5% and 5.5%, and monthly declines of 0.2% and 0.1%.

“The November monthly figures were stronger than October, with 10 cities seeing rising prices versus seven the month before.” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Phoenix and San Francisco were both up 1.4% in November followed by Minneapolis up 1.0%. On the down side, Chicago was again amongst the weakest with a drop of 1.3% for November.

“Winter is usually a weak period for housing which explains why we now see about half the cities with falling month-to-month prices compared to 20 out of 20 seeing rising prices last summer.  The better annual price changes also point to seasonal weakness rather than a reversal in the housing market. Further evidence that the weakness is seasonal is seen in the seasonally adjusted figures: only New York saw prices fall on a seasonally adjusted basis while Cleveland was flat.  

Regional patterns are shifting as well. The Southwest – Las Vegas and Phoenix – are staging a strong comeback with the Southeast -- Miami and Tampa close behind.  The sunbelt, which bore the brunt of the housing collapse, is back in a leadership position.  California is also doing well while the northeast and industrial Midwest is lagging somewhat.  

“Housing is clearly recovering. Prices are rising as are both new and existing home sales. Existing home sales in November were 5.0 million, highest since November 2009. New Home sales at 398,000 were the highest since June 2010.   These figures confirm that housing is contributing to economic growth.

The chart on the previous page shows the index levels for the 10-City and 20-City Composite Indices. As of November 2012, average home prices across the United States are back to their autumn 2003 levels for both the 10-City and 20-City Composites. Measured from  their June/July 2006 peaks, the decline for both Composites is approximately 30% through November  2012.  In November 2012, the recovery for both Composites from their recent lows in early 2012 was approximately 8-9%. 

In November 2012, 10 cities and both Composites posted negative monthly returns. Atlanta, Denver, Las Vegas, Los Angeles, Miami, Minneapolis, Phoenix, San Diego, San Francisco and Seattle were the ten MSAs to post positive month-over-month returns. 

In the context of monthly changes, Boston, Chicago and New York have fared the worst – with more than six months of declining prices in the past 12 months. 

More than 25 years of history for these data series are available, and can be accessed in full by going to www.homeprice.standardandpoors.com. Additional content on the housing market may also be found on S&P Dow Jones Indices’ housing blog: www.housingviews.com.  

The table below summarizes the results for November 2012. The S&P/Case-Shiller Home Price Indices are revised for the 24 prior months, based on the receipt of additional source data. 

Since its launch in early 2006, the S&P/Case-Shiller Home Price Indices have published, and the markets have followed and reported on, the non-seasonally adjusted data set used in the headline indices. For analytical purposes, S&P Dow Jones Indices publishes a seasonally adjusted data set covered in the headline indices, as well as for the 17 of 20 markets with tiered price indices and the five condo markets that are tracked.

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