Big City Gains Fueling National Home Price Growth

Home prices continued to show strong growth this year through August, with many of the nation’s largest housing markets posting considerable gains, according to the most recent S&P/Case-Shiller Home Price Index data.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, reported a slightly higher year-over-year gain in August 2015, which posted a 4.7% annual increase, compared to a 4.6% increase in July 2015.

Additionally, the 10-City Composite rose 4.7% in the year to August, compared to 4.5% in the previous month, whereas the 20-City Composite’s year-over-year gain was 5.1% versus 4.9% in the year to July.

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Reporting the highest year-over-year home price growth among the top 20 cities tracked by the S&P/Case-Shiller index were San Francisco, Denver and Portland, which posted increases of 10.7%, 10.7% and 9.4%, respectively.

Meanwhile, 15 cities reported greater price increases in the year ending August 2015 compared to the year ending July 2015.

San Francisco and Denver were the only cities with double-digit increases, however, S&P/Case-Shiller notes that Phoenix had the longest streak of year-over-year increases. In August 2015, Phoenix reported an increase of 4.9%, signaling the ninth consecutive gain in annual home price gains. 

While many states experienced significant price appreciation, most other recent hosing indicators also showed strength, said David Blitzer, managing director and chairman of the Index Committee for the S&P Dow Jones Indices. 

“Home prices continue to climb at a 4% to 5% annual rate across the country,” Blitzer said in a written statement. “Housing starts topped an annual rate of 1.2 million units in the latest report with continuing strength in both single family homes and apartments.”

In another indicator of housing’s growth, Blitzer noted sales of existing homes are running about 5.5 million units annually with inventories of about five months of sales; and the National Association of Home Builders sentiment survey reached its highest level since 2005.

“A notable part of today’s economy is the continuing low inflation rate; in the year to September, consumer prices were unchanged,” Blitzer stated. “Even excluding food and energy, the core inflation was 1.9%. One result is that a 5% price increase in the vale of a house means more today than it did in 2005-2006, the peak of the housing boom when the inflation rate was higher. The rebound from the recent lows was faster than the 1997-2005 housing boom, and also much less driven by inflation.” 

Written by Jason Oliva

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