Existing Home Sales Hit Highest Peak in Over Three Years

January 29, 2013

Data through November 2012, released by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices showed home prices rose 4.5 percent for the 10-City Composite and 5.5 percent 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 rose 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 percent 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 percent and 5.5 percent, and monthly declines of 0.2 percent and 0.1 percent.
“The November monthly figures were stronger than October, with 10 cities seeing rising prices versus seven the month before,” said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. “Phoenix and San Francisco were both up 1.4 percent in November followed by Minneapolis up one percent. On the down side, Chicago was again amongst the weakest with a drop of 1.3 percent for November."
The chart below 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 percent through November 2012. In November 2012, the recovery for both Composites from their recent lows in early 2012 was approximately eight to nine percent. 
“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," said Blitzer. "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 shifted as well, as the Southwest (Las Vegas and Phoenix) staged a strong comeback with the Southeast (Miami and Tampa) close behind. The Sunbelt area of the U.S., which bore the brunt of the housing collapse, has returned to a leadership position. California is also doing well, while the Northeast and industrial Midwest seem to be lagging.
“Housing is clearly recovering," said Blitzer. "Prices are rising as are both new and existing home sales. Existing home sales in November were five 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."
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 10 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.

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