S&P/Case-Shiller: Home Prices Near Frozen In January

U.S. home prices inched up by only 0.1% in January compared to December and, in fact, actually went down in some markets, according to the S&P/Case-Shiller Home Price Index (HPI).

‘The housing recovery may have taken a breather due to the cold weather,’ says David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. ‘Twelve cities reported declining prices in January versus December; eight of those were worse than the month before. From the bottom in 2012, prices are up 23 percent, and the housing market is showing signs of moving forward with more normal price increases.’

The S&P/Case-Shiller HPI's 20-City Composite posted its third consecutive monthly decline of 0.1%.

On a year-over-year basis, the 10-City and 20-City Composites were up 13.5% and 13.2%, respectively, compared to January 2013.

Las Vegas saw the biggest month-over-month increase in home prices in January, at 1.1%, its 22nd consecutive monthly gain. Despite this, the city is still the farthest from its high set in August 2006 with a peak-to-current decline of 45%.

Meanwhile, Dallas and Denver are now less than 1% away from their recent all-time index highs.

‘The Sun Belt showed the five highest monthly returns,’ Blitzer says. ‘Las Vegas was the leader with an increase of 1.1 percent followed by Miami at 0.7%. San Diego showed its best January performance of 0.6 percent since 2004. San Francisco and Tampa trailed closely at 0.5 percent and 0.4 percent. Elsewhere, New York and Washington, D.C., stood out as they continued to improve and posted their highest year-over-year returns since 2006. Dallas and Denver are the only cities to have reached new record peaks, while Detroit remains the only city with home prices below those of 14 years ago.’

Blitzer adds, ‘Although most analysts do not expect the same rapid increases we saw last year, the consensus is for moderating gains. Existing-home sales declined slightly in February and are at their lowest level since July 2012.’

Las Vegas and San Francisco remain the only two cities posting annual gains of more than 20%. San Diego showed the most improvement with a year-over-year return of 19.4% in January, up from 18% in December. Phoenix saw its annual rate decelerate the most; the city's return peaked last January when it led all 20 cities by a wide margin.

Only seven of the 20 cities measured in the index – Las Vegas, Miami, New York, San Diego, San Francisco, Tampa and Washington – showed positive monthly returns in January. Chicago and Seattle declined the most and posted their fourth consecutive drop in average home prices. Although Cleveland continued its decline, it showed the most improvement, with home prices dropping 0.3% in January compared to December.

Meanwhile, the Federal Housing Finance Agency's (FHFA) House Price Index, which uses a different methodology, shows that home prices inched up 0.5% in January, compared to December, on a seasonally adjusted basis. That index shows that home prices have increased for 23 of the past 24 months, beginning with February 2012. The November 2013 HPI was the exception, with a decrease of 0.1%.

The FHFA notes that it revised downward its home price data for December – from an increase of 0.8% to an increase of 0.7%.

The FHFA HPI is calculated using home sales price information from mortgages either sold to or guaranteed by Fannie Mae and Freddie Mac.

On a year-over-year basis, house prices were up 7.4%, compared to January 2013, according to the FHFA HPI.

Home prices as of January were about 8% below their April 2007 peak and were roughly the same as the May 2005 index level.

The FHFA HPI also shows that home price appreciation was spotty in January, with some regions showing declines while others saw only slight increases. For example, the West South Central division saw home prices drop 0.3%, compared to December, while the Middle Atlantic division saw home prices increase 1.3%.

Looking at home price appreciation on a year-over-year basis, all regions experienced increases, but the degree of recovery varies widely. For example, the Middle Atlantic division saw year-over-year home prices increase 3.2% while the Pacific division saw prices increase 14%.

Yesterday, Black Knight Financial Services released its monthly HPI report, also showing that home prices were flat in January compared to December.

What's more, CoreLogic's HPI report for January, which was released earlier this month, shows that home prices increased 0.9%, compared to December – however, this includes distressed sales.

All four reports use different methodologies to arrive at their findings.


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