DALLAS—Home prices continued their rise across the country over the last 12 months, according to a new report.
The S&P/Case-Shiller Home Price Index 20-city composite index rose 5.5% over the 12-month period ending in October.
San Francisco, Denver and Portland continue to report the highest year-over-year gains among those surveyed with price increases of 10.9% for each. Overall, 12 cities reported greater price increases over the 12-month period. Chicago, Washington and Cleveland reported the least amount of price increase at 1.3%, 1.7% and 2.2%, respectively.
On a month-to-month change basis, of the twenty metropolitan areas that make up the composite index, eight MSAs reported a decline in average prices while 10 MSAs reported increases and two were unchanged, reported Brian Turner, executive director with Meridian Alliance.
“The economy grew at a 2.1% pace during the third quarter of 2015, the same average for all of 2015 and lower annualized pace of growth for both 2013 and 2014. After hitting its peak in May 2015, new and existing homes sales have fallen from 6.32 million units annually to a 5.83 million pace.”
As of October 2015, average home prices are back to their winter 2007 levels. Measured from their June/July 2006 peaks, the peak-to-current decline is approximately 11%-13%, said Turner. Since their March 2012 most recent low, average home prices have recovered about 35%.
“Certainly any positive news on average home prices enhances members' household net wealth, hopefully to entice enough confidence for them to open their wallets and advance consumer spending behavior,” said Turner. “Moreover, higher prices enhance the collateral value of assets which financial institutions hold as security for financing. Hopefully, future decisions by Federal Reserve policymakers will take into account consequences that higher consumer borrowing rates might have on future spending behavior during a fragile economic recovery. Mortgage rates are expected to be less volatile.”