United States: Home prices rise to 11-month high in December
February 28, 2017
The S&P/Case-Shiller 20-city home composite index inched up 0.3% in December from the previous month. The result, which was in line with market expectations, came on top of the 0.2% increase in November. When adjusted for seasonal factors, home prices increased 0.9% from the previous month, mirroring November’s result.
On a year-on-year basis, home prices continued to rise across the U.S. They increased from November’s 5.2% to 5.6% in December, which marked an 11-month high. 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.
S&P commented that a key factor behind rising home prices is low inventory. S&P also signaled that:
“With all 20 cities seeing prices rise over the last year, questions about whether this is a normal housing market or if prices could be heading for a fall are natural. In comparing current home price movements to history, it is necessary to adjust for inflation. Consumer prices are higher today than 20 or 30 years ago, while the inflation rate is lower. Looking at real or inflation-adjusted home prices based on the S&P CoreLogic Case-Shiller National Index and the Consumer Price Index, the annual increase in home prices is currently 3.8%.”
Author: Ricardo Aceves, Senior Economist