Case-Shiller: Home Prices Continued to Climb in December

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U.S. home prices increased 0.5% on an adjusted basis in December compared with November and were up 3.8% compared with December 2018, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.

The index’s 10-city and 20-city composites each posted an increase of 0.4% compared with the previous month.

On an unadjusted basis, home prices nationally increased 0.1% compared with November. 

The 10-city composite posted a 0.1% increase on an unadjusted basis, while the 20-city composite was flat compared with November.

In December, 10 of 20 cities reported increases before seasonal adjustment while 19 of 20 cities reported increases after seasonal adjustment. 

Phoenix, Charlotte and Tampa reported the highest year-over-year gains among the 20 cities. 

In December, Phoenix led the way with a 6.5% year-over-year price increase, followed by Charlotte at 5.3% and Tampa at 5.2%.

Twelve of the 20 cities reported greater price increases in the year ended December 2019 versus the year ended November 2019.

“The U.S. housing market continued its trend of stable growth in December,” says Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, adding that home prices have steadily increased on a year-over-year basis for the past eight years.

“At the national level, home prices are 59 percent above the trough reached in February 2012, and 15 percent above their pre-financial crisis peak,” Lazzara says. “Results for 2019 were broad-based, with gains in every city in our 20-city composite.

Lazzara adds that home prices increased at a faster rate in December when compared with November.

“It is, of course, too soon to say whether this marks an end to the deceleration or is merely a pause in the longer-term trend,” he adds.

Frank Nothaft, chief economist for CoreLogic, says low mortgage rates will likely continue to fuel demand and, as a result, home prices are likely to increase at a faster rate.

“The drop in mortgage rates during the past week has improved payment affordability and will bring prospective buyers into the market,” Nothaft says in a separate statement. “If rates stay low into the spring, we expect sales volume to be the highest in 13 years, and annual home price growth to quicken.”

Bill Banfield, executive vice president of capital markets for Quicken Loans, says, “We continue to see home price increases driven by low supply and strong demand. While the future isn’t always clear, the recent drop in interest rates to historic lows could provide additional affordability for even more buyers to consider making a move.” 

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