United States: Annual growth in house prices speeds up in January
March 28, 2017
The S&P/Case-Shiller 20-city home composite index inched up 0.2% in January from the previous month. The result came in below the 0.3% increase observed in December. When adjusted for seasonal factors, home prices increased 0.9% from the previous month, matching the result seen in December and slightly above market expectations of a 0.8% increase.
On a year-on-year basis, home prices are on the climb across the U.S. They increased from December’s revised 5.5% (previously reported: +5.6% year-on-year) to 5.7% in January, which marks the largest expansion since July 2014. S&P said that Seattle, Portland and Denver, in that order, continued to report the strongest increases in prices of the 20 cities included in the index.
Regarding recent developments, S&P comments on the recent hike in the Fed funds rate and the effect it will have on U.S. home prices:
“The recent action by the Federal Reserve raising the target for the Fed funds rate by a quarter percentage point is expected to add less than a quarter percentage point to mortgage rates in the near future. Given the market’s current strength and the economy, the small increase in interest rates isn’t expected to dampen home buying. If we see three or four additional increases this year, rising mortgage rates could become a concern.”
Author: David Ampudia, Economist