Data through September 2013, 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 that the U.S. National Home Price Index rose 3.2% in the third quarter of 2013 and 11.2% over the last four quarters.
In September 2013, the 10- and 20-City Composites gained 0.7% month-over-month and 13.3% year- over-year. While 13 of 20 cities posted higher year-over-year growth rates, 19 cities had lower monthly returns in September than August.
"The second and third quarters of 2013 were very good for home prices," says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. "The National Index is up 11.2% year- over-year, the strongest figure since the boom peaked in 2006. The 10-City and 20-City Composites year-over-year growth at 13.3% was their highest annual numbers since February 2006.
"Twelve cities posted double-digit annual returns. Regionally, the West continues to lead with Las Vegas gaining 29.1% year-over-year followed by San Francisco at 25.7%, Los Angeles at 21.8% and San Diego at 20.9%. San Francisco and Los Angeles showed their highest annual returns since March 2001 and December 2005. Although Chicago has not reached double-digit growth, the city recorded its highest year-over-year gain since November 2005.
"The strong price gains in the West are sparking questions and concerns about the possibility of another bubble. However the talk is focused on fear of a bubble, not a rush to join the party and buy. Moreover, other data suggest a market beginning to shift to slower growth rather than one about to accelerate. Existing home sales weakened in the most recent report, home construction remains far below the boom levels of six or seven years ago and interest rates are expected to be higher a year from now.
"Housing continues to emerge from the financial crisis: the proportion of homes in foreclosure is declining and consumers' balance sheets are strengthening. The longer run question is whether household formation continues to recover and if home ownership will return to the peak levels seen in 2004."
Nineteen cities decelerated month-over-month from August to September. Las Vegas and Tampa showed the most weakness with their rates declining by 1.6 percentage points. Las Vegas went from a +2.9% monthly return in August to +1.3% in September while Tampa decreased from +1.8% to +0.2%. Charlotte was the only city to post a negative monthly return for September, its first since November 2012. Detroit managed to take the lead with a monthly increase of 1.5%, but still remains the only city below its January 2000 level.
Looking at the September annual rates of change, 13 cities showed improvement versus their August year-over-year returns. Cleveland accelerated the most (from +3.7% in August to +5.0% in September), but it remains the second worst performing city with only New York trailing at +4.3%. Twelve MSAs showed double-digit increases with Las Vegas, Los Angeles, San Diego and San Francisco posting gains of over 20%. Las Vegas posted an impressive year-over-year increase of 29.1% in September, marginally down from 29.2% in August.