Data through February 2014, released by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices, show that the annual rates of gain slowed for the 10-City and 20-City Composites. The Composites posted 13.1 percent and 12.9 percent in the 12 months ending February 2014. Thirteen cities saw lower annual rates in February. Las Vegas, the leader, posted 23.1 percent year-over-year versus 24.9 percent in January. The only city in the Sun Belt that saw improvement in its year-over-year return was San Diego with an increase of 19.9 percent.
Both Composites remained relatively unchanged month-over-month. Thirteen of the 20 cities declined in February. Cleveland had the largest decline of 1.6 percent followed by Chicago and Minneapolis at -0.9 percent. Las Vegas posted -0.1 percent, marking its first decline in almost two years. Tampa showed its largest decline of 0.7 percent since January 2012.
“Prices remained steady from January to February for the two Composite indices,” said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. “The annual rates cooled the most we’ve seen in some time. The three California cities and Las Vegas have the strongest increases over the last 12 months as the West continues to lead. Denver and Dallas remain the only cities which have reached new post-crisis price peaks. The Northeast with New York, Washington and Boston are seeing some of the slowest year-over-year gains. However, even there prices are above their levels of early 2013. On a month-to-month basis, there is clear weakness. Seasonally adjusted data show prices rose in 19 cities, but a majority at a slower pace than in January."
“Despite continued price gains, most other housing statistics are weak. Sales of both new and existing homes are flat to down," said Blitzer. "The recovery in housing starts, now less than one million units at annual rates, is faltering. Moreover, home prices nationally have not made it back to 2005. Mortgage interest rates, which jumped in May last year and are steady since then, are blamed by some analysts for the weakness. Others cite difficulties in qualifying for loans and concerns about consumer confidence. The result is less demand and fewer homes being built. Five years into the recovery from the recession, the economy will need to look to gains in consumer spending and business investment more than housing. Long overdue activity in residential construction would be welcome, but is certainly not assured.”
Only five cities saw their annual rates improve in February. After posting annual gains of over 20 percent for their 12th consecutive month, Las Vegas and San Francisco both showed deceleration in their annual rates. San Diego narrowed the gap with a return of 19.9 percent. Washington D.C. recorded its eight consecutive improvement with an annual rate of 9.1 percent, its highest since May 2006.
Thirteen cities declined for the month of February. Cleveland and Tampa showed their largest declines of 1.6 percent and 0.7 percent since January 2012. Seattle improved from a decline of 0.8 percent in January to an increase of 0.6 percent in February. Denver posted a small decline and is less than one percent away from its peak set in September 2013. Dallas increased 0.2 percent and continues to reach new index highs. Detroit remains the only city below its January 2000 level.
“Despite the flattening of monthly home price gains, we’re still seeing a healthy appreciation when you take a step back," said Quicken Loans Vice President Bill Banfield. "In conjunction with rates ticking back down recently, this moderation may bring some folks back in the market who’ve been previously priced out.”
