Data through November 2013, released by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices (HPI) showed that the 10-City and 20-City Composites increased 13.8 percent and 13.7 percent year-over-year. Dallas posted its highest annual return of 9.9 percent since its inception in 2000. Chicago also stood out with an annual rate of 11 percent its highest since December 1988.
For the month of November, the two Composites declined 0.1 percent. After nine consecutive months of gains, this marks the first decrease since November 2012. Nine out of 20 cities recorded positive monthly returns; of these nine, Boston and Cleveland were the only cities not in the Sun Belt. Minneapolis and San Diego remained relatively flat. After declining last month, Dallas edged up to set a new index high. Denver is 0.6 percent off of its highest level due to two consecutive months of declines.
“Home prices continue to rise despite last May’s jump in mortgage interest rates,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Mortgage applications for purchase were up in recent weeks confirming home builders’ optimism shown by the NAHB survey. Combined with low inflation, 1.5 percent in 2013, homeowners are enjoying real appreciation and rising equity values. While housing will make further contributions to the economy in 2014, the pace of price gains is likely to slow during the year.”
The chart above shows the index levels for the 10-City and 20-City Composite Indices. As of November 2013, average home prices across the U.S. are back to their mid-2004 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 20 percent. The recovery from the March 2012 lows is 23 percent and 23.7 percent for the 10-City and 20-City Composites.
Nine cities showed price increases from October to November. Miami took the lead with a gain of 1.4 percent and Las Vegas, the previous leader, followed at +0.6 percent. Chicago experienced the largest decline of 1.2 percent. Nine MSAs showed acceleration as measured by their monthly returns–Boston, Cleveland and San Francisco showed returns that were over 50 basis points higher in November compared to October. Last month after experiencing its first decline in 19 months, San Francisco rebounded to positive territory with a 0.4 percent gain in November. Las Vegas, Los Angeles, Miami, Phoenix and Tampa are the only cities that recorded positive gains for 12 or more consecutive months.
“When we look at prices through a more holistic lens, we see a healthy yearly increase in prices and the telling signs of a healthy housing market," said Quicken Loans Vice President Bill Banfield. "Home prices may be leveling off, but this slowdown quells all fears of a bubble, while the annual increases can encourage owners to list their home.”
Boston, Chicago, Cleveland, Dallas, Las Vegas, Miami, New York, Tampa and Washington were the nine cities to accelerate on an annual basis. Boston showed an annual rate of 9.8 percent, an improvement of 1.2 percentage points from last month. Cleveland and New York followed with November year-over-year returns of six percent compared to 4.9 percent for October. Despite the improvement, Cleveland and New York remain the two lowest ranked cities.