Home prices see biggest gain in eight years, but boom abating

by Adam Smith02 Jan 2014
Home prices have posted their highest gain in nearly eight years, new figures have indicated.

The S&P/Case-Shiller Home Price Indices through October showed the 10-City and 20-City Composites saw strong gains. The indices posted year-over-year gains of 13.6%, their highest since February 2006. The gain marked the 17th consecutive month both Composites increased on a year-over-year basis.

But Index Committee chairman David M. Blitzer said a deeper look at the numbers reveals waning growth.

"Both Composites' annual returns have been in double-digit territory since March 2013 and increasing, now up 13.6% in the year ending in October. However, monthly numbers show we are living on borrowed time and the boom is fading," Blitzer said.

Indeed, monthly figures showed far more subued gains, with prices 0.2% higher from September. Stein said most economic forecasts pointed to single-digit growth in 2014.

"The key economic question facing housing is the Fed's future course to scale back quantitative easing and how this will affect mortgage rates. Other housing data paint a mixed picture suggesting that we may be close to peak gains in prices," he said.


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