United States: Strong home price growth continues at start of 2018
March 27, 2018
Home prices maintained their steady climb in January, with the S&P/Case-Shiller 20-city composite home price index increasing 0.3% on a month-on-month basis. January’s reading came in above the 0.2% rise recorded in December and marked the largest monthly increase since September. When adjusted for seasonal factors, house prices grew 0.8% from the previous month, slightly above the 0.7% increase expected by market analysts and the revised 0.7% rise logged in December (previously reported: +0.6% month-on-month).
Following the 6.3% year-on-year increase recorded in December, home prices climbed 6.4% in January—the joint-highest annual growth rate since July 2014. Seattle, Las Vegas and San Francisco posted the largest gains in house prices among the 20 cities that comprise the index, each reporting double-digit growth in year-on-year terms. Meanwhile, and similar to last month’s results, Chicago and Washington posted the weakest annual increase in prices, with both cities at 2.4% growth.
Commenting on this month’s outturn, David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, said:
“Two factors supporting price increases are the low inventory of homes for sale and the low vacancy rate among owner-occupied housing. The current months-supply—how many months at the current sales rate would be needed to absorb homes currently for sale—is 3.4; the average since 2000 is 6.0 months, and the high in July 2010 was 11.9. Currently, the homeowner vacancy rate is 1.6% compared to an average of 2.1% since 2000; it peaked in 2010 at 2.7%. Despite limited supplies, rising prices, and higher mortgage rates, affordability is not a concern.”
Author: Javier Colato, Economist