Data through April 2014, released by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices show that the 10-City and 20-City Composites posted annual gains of 10.8 percent. This is a significantly lower rate when compared to last month. Nineteen of the 20 cities saw lower annual gains in April than in March. California (Los Angeles, San Diego and San Francisco) saw their returns worsen by approximately three percentage points. Boston was the only city to see its annual rate improve.
The 10-City and 20-City Composites increased one percent and 1.1 percent in April. Seven cities—Cleveland, Las Vegas, Los Angeles, Miami, Phoenix, San Diego and San Francisco—reported lower returns than in March. Boston rose 2.9 percent, its largest monthly gain in over its 27 years of history. San Francisco rose 2.3 percent, its sixth consecutive price increase.
“Although home prices rose in April, the annual gains weakened,” said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. “Overall, prices are rising month-to-month but at a slower rate. Last year, some Sunbelt cities were seeing year-over-year numbers close to 30 percent, now all are below 20 percent: Las Vegas (18.8 percent), Los Angeles (14 percent), Phoenix (9.8 percent), San Diego (15.3 percent) and San Francisco (18.2 percent). Other cities around the nation are also experiencing slower price increases."
The chart above depicts the 10-City Composite and the 20-City Composite Home Price Indices. In April 2014, the 10-City and 20-City Composites posted year-over-year increases of 10.8 percent.
“While the annual numbers worsened, the monthly figures were seasonally strong. Five cities—Atlanta, Boston, Chicago, San Francisco and Seattle—reported monthly gains of two percent or more," said Blitzer. "Dallas and Denver gained 1.6 percent and continue to set new peaks. Boston and Charlotte are less than 10 percent away from their peaks."
The chart above shows the index levels for the 10-City and 20-City Composite Indices. As of April 2014, average home prices across the U.S. are back to their summer 2004 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 18-19 percent. The recovery from the March 2012 lows is 25-26 percent for the 10-City and 20-City Composites.
“Slow and steady is the reoccurring theme for these past few months of home price data," said Quicken Loans Vice President Bill Banfield. "While the year-over-year growth fell below expectations, the rise should instill confidence in a sustained and significant recovery in the housing market.”
All cities continue to post positive year-over-year returns. Boston was the only city to show improvement in its annual rate, as it went from 8.3 percent in March to nine percent in April. After posting 13 months of annual gains of over 20 percent, San Francisco saw its rate dip below 20 percent.
In April, all cities saw prices increase, with 12 cities reporting higher returns than last month. Boston gained the most with an increase of 2.9 percent, its highest month-over-month gain. San Francisco and Seattle trailed at +2.3 percent. At the bottom of the list, New York gained only 0.1 percent. Dallas and Denver continue to set new peaks, while Detroit remains the only city below its January 2000 value.
“Near-term economic factors favor further gains in housing: Mortgage rates are lower than a year ago, the Fed is expected to keep interest rates steady until mid-2015 and the labor market is improving," said Blitzer. "However, housing is not back to normal: Prices are being supported by cash sales, low inventories and declining foreclosure and REO sales. First-time homebuyers are not back in force and qualifying for a mortgage remains challenging. The question is whether housing will bounce back before the Fed begins to tighten sometime next year."