The Home Buyer's Korner

Information presented should be used for educational purposes only.

February 27th, 2015

Guy looking up in color

Case-Shiller for Dec 2014

House for Sale

Any housing recovery we saw beginning in mid-2014 has evaporated. While home prices and the existing home sales market appears semi-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.

Housing is soft despite jobs growth; a declining unemployment rate; low interest rates and positive consumer confidence. Much of this I think can be contributed to stagnant wages and tough underwriting guidelines we were told would begin to improve by FHFA, but it hasn’t happened yet!

Case Shiller

Half of the 20 U.S. cities included in the S&P/Case-Shiller home price index increased for December. The remaining 10 broken down to four cities unchanged and six cities seeing a drop in pricing. House prices dropped the most in Chicago with a big fall of 0.9 percent compared with the November index, which was 1% lower than October’s index. House prices have increased just 1.3% year-over-year in Chicago and has been the smallest increase among the 20 cities used in the index.

The S&P/Case-Shiller home price index for December increased by 4.5 percent year-over-year for the 20-city composite index and by 4.3 percent for the 10-city composite index. The national index rose 4.6 percent year-over-year, compared to a 4.7% gain in November. The consensus estimate for the 20-city year-over-year index called for growth of 4.2 percent as we move into 2015.

Month over month, the 10 and 20-city indexes increased by 0.1 percent, while the national index fell by 0.1 percent. The index tracks prices on a three-month rolling average and December represents the three-month average of October, November and December prices. With the latest data in we see that  the average home prices for December remain at the autumn levels of 2004.

When comparing home prices at their peak in the summer of 2006, home prices on both indexes remain down 16 to 17 percent. Since the pricing lows of home prices nationally in March 2012 home prices are up 28.2 for the 10 city index and up 29.1 percent for the 20-city indexes, with momentum essentially flat compared with November 2014.

All 20 cities in the index posted year-over-year gains, but for six cities the month-over-month changes were negative:

Chicago ~ down 0.9 percent;

Cleveland ~ down 0.5 percent;

Las Vegas ~ down 0.3 percent;

Minneapolis ~ down 0.3 percent;

Boston ~ down 0.2 percent;

and San Diego ~ down  0.2 percent.

Real Estate RecoveryThe largest month-over-month gains appeared in Miami coming in at a 0.7 percent gain and Denver showing a 0.5 percent gain. Year-over-year house price changes in December were smallest in Cleveland, which was up 0.6 percent, Minneapolis at 1.5 percent and New York City at 1.5 percent.

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