Home Price Gains Continue Increasing Nationwide

  • Share
  • Read Later

Citing “steady employment and low borrowing rates” as well as inventories that have fallen “to their lowest post-recession levels,” the S&P Dow Jones Indices released Case-Shiller housing data that showed home prices jumping 8.1% from the previous year. When charted, the data looks like it’s been hit with a booster rocket, with the past three months’ reports showing solid year-over-year gains of 5.5%, 6.8%, and the just-reported 8.1%.

All twenty metro areas covered in the index posted gains, ranging from New York’s 0.6% to Phoenix’s 23.2%. Eight cities’ gains were in the double-digits: Miami (10.8%); Los Angeles and Minneapolis (each 12.1%); Atlanta (13.4%); Detroit (13.8%); Las Vegas (15.3%), and San Francisco (17.5%), in addition to Phoenix. That list is notable for its breadth: Miami, Las Vegas, and Phoenix all fell victim to a run of investment speculation during the housing boom, and subsequently crashed hard; but the other five metros range from rust-belt economies hit hard by the Great Recession (Detroit) to high-flying tech-driven ones that were relatively unscathed (San Francisco).

The latest Case-Shiller data reflect January sales, so the possibility of a strong spring in the real estate market — traditionally the high season for home sales — is emerging.

The National Association of Realtors, which reports February data, notes that “sales have been above year-ago levels for 20 consecutive months,” with volume at a seasonally adjusted annual pace of 4.98 million units. That’s 10.2% above last February’s pace of 4.52 million units. In addition, homes are moving much more quickly, with a median days on market of 74, down 24% from a year ago.

The one data point casting a shadow on the prospect of a sunny spring is mortgage applications. The Mortgage Bankers’ Association reports that the volume of mortgage applications has dropped in each of its latest two weekly surveys.

That’s not a reaction to interest-rate swings; the interest rate for 30-year fixed loans, according to the MBA, has recently been unchanged at 3.53%. (Two-thirds of home purchases are financed, according to the National Association of Realtors; the one-third that are cash sales are mostly investments.) If anything, consumers expect mortgage rates to rise. Fannie Mae’s National Housing Survey, which tracks sentiment concerning home prices and interest rates, showed that the percentage of people surveyed who think mortgage rates will go up increased by 4 percentage points to 45%, the highest level since August 2011.