Home Prices Steadily Rise in July

Data through July 2013, released by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed increases of 1.9 percent and 1.8 percent from June for the 10- and 20-City Composites. For at least four months in a row, all 20 cities showed monthly gains. Phoenix posted 22 consecutive months of positive returns. Although home prices in all the cities increased, 15 cities and both Composites saw these monthly rates decelerate in July versus June.

Over the last 12 months, prices rose 12.3 percent and 12.4 percent as measured by the 10- and 20-City Composites. The year-over-year returns show a brighter outlook with 13 cities posting improvement in July versus June values. Las Vegas increased the most from +24.9 percent in June to +27.5 percent in July.

“Home prices gains are holding their 12 percent annual rate of gain established by the two Composite indices in April,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The Southwest continues to lead the housing recovery. Las Vegas home prices are up 27.5 percent year-over-year; in California, San Francisco, Los Angeles and San Diego are up 24.8 percent, 20.8 percent and 20.4 percent respectively. However, all remain far below their peak levels.

“Since April 2013, all 20 cities are up month to month; however, the monthly rates of price gains have declined. More cities are experiencing slow gains each month than the previous month, suggesting that the rate of increase may have peaked.

“Following the increase in mortgage rates beginning last May, applications for mortgages have dropped, suggesting that rising interest rates are affecting housing. The Fed’s announcement last week that QE3 bond buying will continue for the time being may have only a limited, though favorable, impact on housing.”

As of July 2013, average home prices across the United States are back to their spring 2004 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 21 to 22 percent. The recovery from the March 2012 lows is 20.5 percent and 21.2 percent for the 10-City and 20-City Composites.

All 20 cities continued to show positive monthly gains with Chicago leading at +3.2 percent. Seattle, Tampa and Washington were the only three MSAs where returns increased from June to July. Cleveland showed the most weakness with a +0.5 percent return in July versus +2 percent in June.

Looking at the annual rates of change, thirteen cities showed acceleration with San Francisco posting its highest year-over-year return of 24.8 percent since March 2001. Atlanta, Boston, Charlotte, Detroit, Miami, Minneapolis and Phoenix were the seven MSAs with lower annual growth rates; the Twin Cities decreased the most with +9.5 percent in July compared to +11.5 percent in June. Although Detroit posted its 25th consecutive positive year-over-year return, it remains the only city below its January 2000 level.