The United States is experiencing a boom in home prices, says a sector expert.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, achieved a 6.3% annual gain in December, up from 6.1% in the previous month. It is also rising at the fastest rate for three and a half years.
The 10-City Composite annual increase rose 6%. This is no change from the previous month, while the 20-City Composite posted a 6.3% year-over-year gain.
Before seasonal adjustment, the National Index posted a month-over-month gain of 0.2% in December. Twelve of the 20 cities reported increases in December before seasonal adjustment. At the same time, all 20 cities reported increases after seasonal adjustment.
Boom in home prices
David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, says the nation is seeing a boom in home prices.
“The rise in home prices should be causing the same nervous wonder aimed at the stock market after its recent bout of volatility.
“Across the 20 cities covered by S&P CoreLogic Case Shiller Home Price Indices, the average increase from the financial crisis low is 62%; over the same period, inflation was 12.4%. None of the cities covered in this release saw real, inflation-adjusted prices fall in 2017.
“The National Index, which reached its low point in 2012, is up 38% in six years after adjusting for inflation, a real annual gain of 5.3%. The National Index’s average annual real gain from 1976 to 2017 was 1.3%. Even considering the recovery from the financial crisis, we are experiencing a boom in home prices.
“Within the last few months, there are beginning to be some signs that gains in housing may be leveling off. Sales of existing homes fell in December and January after seasonal adjustment and are now as low as any month in 2017.
“Pending sales of existing homes are roughly flat over the last several months. New home sales appear to be following the same trend as existing home sales. While the price increases do not suggest any weakening of demand, mortgage rates rose from 4% to 4.4% since the start of the year.”