With some reports indicating home prices have risen in more than a quarter of U.S. housing markets, it’s no surprise that values continued their steady climb to start off 2016, according to the most recent home price data released by S&P/Case-Shiller.
Prices recorded a slightly higher year-over-year gain, rising 5.4% annually in January 2016, as reported by the S&P/Case-Shiller U.S. National Home Price Index.
January’s increase was supported by similar growth in both the top-10 and 20 major U.S. housing markets, with the 10-City Composite tracked by S&P/Case-Shiller up 5.1% for the year, and the 20-City Composite up 5.7% year-over-year.
After seasonal adjustment, however, the national 10- and 20-City Composites rose 0.5%, 0.8% and 0.7%, respectively, from the previous month.
“Home prices continue to climb at more than twice the rate of inflation,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, in a written statement.
Among the 20 cities, another month of double-digit annual price increases drove Portland, Ore., Seattle and San Francisco to report the highest year-over-year gains. Portland led the way with an 11.8% increase year-over-year in January, followed by Seattle with 10.7% and San Francisco with a 10.5% increase.
Eleven cities also reported greater price increases in the year ending January 2016 compared to the year ending December 2015, with the western part of the country seeing the largest price gains in the past year, and the northeast seeing the weakest.
Low housing inventories and short supply are boosting home prices, however, financing continues to be a concern for some potential purchasers, particularly young adults and first-time homebuyers, Blitzer said.
“While rising home prices are certainly a factor deterring home purchases, individual financial positions are more important than local housing market conditions,” he said. “One hopeful sign is that the home ownership rate, at 63.7% in the 2015 fourth quarter, may be turning around.”
This rate, Blitzer notes, is up slightly from 63.5% in the second quarter of 2015, but far below its 69.1% high reported during 2004.
Written by Jason Oliva