US Home Price Growth Accelerates In December

Case Shiller Chicago Year Over Year

Case Shiller Chicago Year Over Year

Seattle, Portland, and Denver reported the highest year-over-year gains among the 20 cities over the 11 months leading up to December.

An index measuring 20 cities shows that home prices increased an annual 5.6% in December, while a separate 10-city index shows that home prices gained 4.9%.

The indices, generated by S&P Dow Jones and CoreLogic and covering all nine US census divisions, showed an annual increase of 5.8% in December.

The strongest annual increase was recorded in Seattle at 10.8% with Portland at 10.0%.

According to previous Case-Shiller reports, Denver saw year-over-year price growth of 8.7 percent in November and 8.3 percent in October.

The Case-Shiller index goes beyond evaluating home transaction prices to track repeat sales of identical single-family houses as they turn over through the years. Steady job gains and growing consumer confidence have encouraged more people to take the plunge and look for a home.

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Still, mortgage rates have risen since last fall, and with prices also increasing, homes are becoming less affordable. "If anything, the latest data suggest acceleration".

Home prices have now risen in each of the past six months after falling in each of the prior three months. This is up from November's increase of 5.6% and sets a 30-month high. "With all 20 cities seeing prices rise over the a year ago, questions about whether this is a normal housing market or if prices could be heading for a fall are natural". "I don't think it's a bubble, but I don't think it's sustainable, nor is it healthy". Since 1975, the average pace is 1.3%; about two-thirds of the time, the rate is between -4% and +7%. Markets with higher home prices are hit harder by rate increases.

But while home prices are increasing across the USA, the speed of increase is not alarming.

The 10-city and 20-city composites each posted a 0.3% increase, on an unadjusted basis, month over month. After seasonal adjustment, all 20 cities saw prices rise.

The median home price in San Diego County was $495,000 in December, CoreLogic said. Average rates for 30-year fixed mortgages rose from roughly 3.5% around Election Day to 4.32% at the end of December, according to mortgage company Freddie Mac. "In the boom-bust of 2005-2009, prices of low, medium, and high-tier homes moved together, while in other periods, including now, the tiers experienced different patterns".

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