Is the housing recovery losing momentum?

by MPA24 Feb 2015
U.S. home prices experienced a slight uptick in December, according to the latest data from the S&P/Case-Shiller National U.S. Home Price Index. Nine cities reported monthly increases in prices.

Year-over-Year
Both the 10-City and 20-City Composites saw year-over-year increases in December compared to November. The 10-City Composite gained 4.3% year-over-year, up from 4.2% in November. The 20-City Composite gained 4.5% year-over-year, compared to a 4.3% increase in November. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.6% annual gain in December 2014 versus 4.7% in November.

The fastest year-over-year gains were in San Francisco and Miami, where prices rose 9.3% and 8.4% over the last 12 months. Twelve cities, including Cleveland, Denver, and Seattle, saw prices rise faster in the year to December than a month earlier. Las Vegas led the declining annual returns with 6.9%, down from 7.7% annually.

Month-over-Month
The National index was slightly negative in December, while both composite indices were positive.  Both the 10- and 20-City Composites reported slight increases of 0.1%, while the National Index posted a -0.1% change for the month. Miami and Denver led all cities in December with increases of 0.7% and 0.5% respectively. Chicago and Cleveland offset those gains by reporting decreases of  -0.9% and -0.5% respectively.

December recorded mixed monthly figures. Nine cities recorded higher monthly figures, and six posted decreases. Five cities reported relatively flat monthly changes for December. Miami had the largest increase of all 20 cities at 0.7% month-over-month.

"The housing recovery is faltering. While prices and sales of existing homes are close to normal, construction and new home sales remain weak. Before the current business cycle, any time housing starts were at their current level of about one million at annual rates, the economy was in a recession," David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, said. "The softness in housing is despite favorable conditions elsewhere in the economy: strong job growth, a declining unemployment rate, continued low interest rates and positive consumer confidence.

The western half of the nation plus Miami and Atlanta experienced year-over-year increases of 5% or more. San Francisco and Miami were the strongest. Dallas, Denver, Las Vegas and Atlanta also experienced solid gains.

Phoenix was an exception to the western strength with only a 2.4% increase; San Diego was a bit under 5% at 4.8%.  The Midwest and Northeast lagged. Boston was the strongest among this weak group with prices up 3.8%. “The regional patterns and the weakness in new construction and new sales may reflect decreasing mobility – fewer people moving to different parts of the country or seeking jobs in different regions,” Blitzer added.
 
  Dec. 2014 Dec./Nov. Nov./Oct. 1-Year  
Metropolitan Area Level Change (%) Change (%) Change (%)  
Atlanta 119.15 0.2% 0.2% 5.1%  
Boston 175.04 -0.2% -0.2% 3.8%  
Charlotte 128.47 0.2% -0.3% 3.5%  
Chicago 126.98 -0.9% -1.2% 1.3%  
Cleveland 105.79 -0.5% -0.4% 1.5%  
Dallas 142.77 0.0% 0.1% 7.5%  
Denver 158.17 0.5% 0.1% 8.1%  
Detroit 97.21 0.0% -0.8% 2.8%  
Las Vegas 137.41 -0.3% 0.4% 6.9%  
Los Angeles 226.68 0.3% 0.3% 5.5%  
Miami 192.49 0.7% 0.6% 8.4%  
Minneapolis 140.73 -0.3% -0.7% 1.9%  
New York 175.24 0.0% -0.8% 1.9%  
Phoenix 147.98 0.2% 0.2% 2.4%  
Portland 170.70 0.2% 0.1% 6.8%  
San Diego 203.14 -0.2% 0.3% 4.8%  
San Francisco 197.43 0.4% 0.2% 9.3%  
Seattle 169.77 0.0% -0.4% 6.6%  
Tampa 165.19 0.1% 0.8% 6.4%  
Washington 207.09 0.0% -0.6% 1.5%  
Composite-10 187.81 0.1% -0.3% 4.3%  
Composite-20 173.02 0.1% -0.2% 4.5%  
U.S. National 166.82 -0.1% -0.1% 4.6%  
Source: S&P Dow Jones Indices and CoreLogic      
Data through December 2014        

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