Home Prices on Long-Term Spell Upward

Home prices are continuing their long-term spell upward, with a February gain of 6.3 percent, according to the S&P CoreLogic/Case-Shiller Indices.

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index’s 10-City Composite, which is an average of 10 metros (Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco and Washington, D.C.), rose 6.5 percent year-over-year, an increase from 6 percent in January. The 20-City Composite—which is an average of the 10 metros in the 10-City Composite, plus Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland, Seattle and Tampa—rose 6.8 percent year-over-year, an increase from 6.4 percent in January. Month-over-month, both the 10-City Composite and the 20-City composite rose, each 0.7 percent.

“Home prices continue to rise across the country,” says David M. Blitzer, chairman and managing director of the S&P Dow Jones Indices Index Committee. “The S&P CoreLogic Case-Shiller National Index is up 6.3 percent in the 12 months through February 2018. Year-over-year prices measured by the national index have increased continuously for the past 70 months, since May 2012. Over that time, the price increases averaged 6 percent per year. This run, which is still ongoing, compares to the previous long run from January 1992 to February 2007, 182 months, when prices averaged 6.1 percent annually. With expectations for continued economic growth and further employment gains, the current run of rising prices is likely to continue.

“Increasing employment supports rising home prices both nationally and locally,” Blitzer says. “Among the 20 cities covered by the S&P CoreLogic Case-Shiller Indices, Seattle enjoyed both the largest gain in employment and in home prices over the 12 months ended in February 2018. At the other end of the scale, Chicago was ranked 19th in both home price and employment gains; Cleveland ranked 18th in home prices and 20th in employment increases. In San Francisco and Los Angeles, home price gains ranked much higher than would be expected from their employment increases, indicating that California home prices continue to rise faster than might be expected. In contrast, Miami home prices experienced some of the smaller increases despite better-than-average employment gains.”

“There is no let-up to rising home prices,” said Lawrence Yun, chief economist of the National Association of REALTORS® (NAR), in a statement. “The Case-Shiller Index and National Association of REALTORS® median home price both show gains of roughly double the average wage growth. Even as the tightening job market is starting to boost incomes, those looking to buy are facing a double whammy of fast-rising home prices and higher mortgage rates.

“The way to make housing more affordable is to build more homes, particularly smaller-sized entry level homes and condominiums,” Yun said. “Regulatory relief to small-sized community banks will also help boost construction loans. Local governments need to speedily approve housing permits, and there needs to be a way to more easily acquire trade skills like carpentry, wood framing and other construction specialties for those wanting to earn good middle-income salaries without having to go to college. Such actions will boost economic growth and provide better access to homeownership.”

The complete data for the 20 markets measured by S&P:

Atlanta, Ga.
Month-Over-Month (MoM): 0.4%
Year-Over-Year (YoY): 6.5%

Boston, Mass.
MoM: 0.7%
YoY: 5.7%

Charlotte, N.C.
MoM: 0.8%
YoY: 6.4%

Chicago, Ill.
MoM: 0.1%
YoY: 2.6%

Cleveland, Ohio
MoM: 0.4%
YoY: 4.1%

Dallas, Texas
MoM: 0.6%
YoY: 6.4%

Denver, Colo.
MoM: 1.2%
YoY: 8.4%

Detroit, Mich.
MoM: 1.1%
YoY: 8.4%

Las Vegas, Nev.
MoM: 1%
YoY: 11.6%

Los Angeles, Calif.
MoM: 1%
YoY: 8.3%

Miami, Fla.
MoM: 0.6%
YoY: 4.6%