Data through December 2012, released this week by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended the year with strong gains. The national composite posted an increase of 7.3 percent for 2012. The 10- and 20-City Composites reported annual returns of 5.9 percent and 6.8 percent in 2012. Month over- month, both the 10- and 20-City Composites moved into positive territory with gains of 0.2%; more than reversing last month’s losses.
In addition to the three composites, nineteen of the 20 MSAs posted positive year-over-year growth – only New York fell.
The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 7.3 percent gain in the fourth quarter of 2012 over the fourth quarter of 2011. In December 2012, the 10- and 20-City Composites posted annual increases of 5.9 percent and 6.8 percent, respectively.
“Home prices ended 2012 with solid gains,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Housing and residential construction led the economy in the 2012 fourth quarter.
In December’s report all three headline composites and 19 of the 20 cities gained over their levels of a year ago. Month-over-month, 9 cities and both Composites posted positive monthly gains. Seasonally adjusted, there were no monthly declines across all 20 cities.
“The National Composite increased 7.3 percent over the four quarters of 2012. From its low in the first quarter, it surged in the second and third quarter and slipped slightly in the 2012 fourth period. The 10- and 20-City Composites, which bottomed out in March 2012 continued to show both year-over-year and monthly gains in December. These movements, combined with other housing data, suggest that while housing is on the upswing some of the strongest numbers may have already been seen.
“Atlanta and Detroit posted their biggest year-over-year increases of 9.9 percent and 13.6 percent since the start of their indices in January 1991. Dallas, Denver, and Minneapolis recorded their largest annual increases since 2001. Phoenix continued its climb, posting an impressive year-over-year return of 23.0 percent; it posted eight consecutive months of double-digit annual growth.”
As of December 2012, average home prices across the United States for the 10-City and 20-City Composites are back to their autumn 2003 levels. Measured from their June/July 2006 peaks, the decline for both Composites is approximately 30 percent through December 2012. For both Composites, the December 2012 levels are approximately 8-9 percent above their recent lows seen in March 2012.
In December 2012, nine MSAs and both Composites posted positive monthly gains, led by Las Vegas with an increase of 1.8 percent. Eleven cities declined with Chicago posting the largest negative monthly return of 0.7 percent.
Atlanta and Detroit remain the only three cities with average home prices below their January 2000 levels. Detroit with an 80.04 print is 20 percent below its January 2000 level.
“The high end of the market is doing well and while it’s a fashionable thing to say that it is because of foreign money, I suspect the actual reason is that the one percent have gotten 122 percent of the recovery,” says USC Lusk Center for Real Estate
Director, Richard Green. “Since the low end of the market is being targeted by investors, it’s the middle market that needs help – particularly in the form of higher income – if it is going to have a sustained recovery.”
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