U.S. Home Prices Rise in March at Slowing Pace

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According to the latest S&P/Case-Shiller Home Price Indices, the 10-City and 20-City Composite Indices gained 0.8% and 0.9% month-over-month. In the first quarter of 2014, the National Index gained 0.2%. Nineteen of the 20 cities showed positive returns in March - New York was the only city to decline. Dallas and Denver reached new index peaks.

In March, the National and Composite Indices saw their annual rates of gain slow significantly. Chicago showed its highest year-over-year return of 11.5% since December 1988. Las Vegas and San Francisco, the cities with the highest returns, saw their rates of gain slow to approximately 21%; their post-crisis peak returns were 29.2% and 25.7%. At the lower end was Cleveland with a gain of 3.9% in the 12 months ending March 2014.


 
The chart above depicts the annual returns of the U.S. National, the 10-City Composite and the 20-City Composite Home Price Indices. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 10.3% gain in the first quarter of 2014 over the first quarter of 2013. The 10- and 20-City Composites posted year-over-year increases of 12.6% and 12.4% in March 2014.

"The year-over-year changes suggest that prices are rising more slowly," says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. "Annual price increases for the two Composites have slowed in the last four months and 13 cities saw annual price changes moderate in March. The National Index also showed decelerating gains in the last quarter. Among those markets seeing substantial slowdowns in price gains were some of the leading boom-bust markets including Las Vegas, Los Angeles, Phoenix, San Francisco and Tampa.

"Despite signs of decelerating prices, all cities were higher than a year ago and all but New York were higher in March than in February. However, only Denver and Dallas have set new post-crisis highs and they experienced relatively lower peak levels than other cities. Four locations are fairly close to their previous highs: Boston (8%), Charlotte (9%), Portland (13%) and San Francisco (15%).

"Housing indicators remain mixed. April housing starts recovered the drop in March but virtually all the gain was in apartment construction, not single family homes. New home sales also rebounded from recent weakness but remain soft. Mortgage rates are near a seven month low but recent comments from the Fed point to bank lending standards as a problem. Other comments include arguments that student loan debt is preventing many potential first time buyers from entering the housing market."



The chart above shows the index levels for the U.S. National Home Price Index, as well as its annual returns. As of the first quarter of 2014, average home prices across the United States are back to their levels posted in the spring of 2004. At the end of the first quarter of 2014, the National Index was up 0.2% over the fourth quarter of 2013 and 10.3% above the first quarter of 2013.



The chart above shows the index levels for the 10-City and 20-City Composite Indices. As of March 2014, average home prices across the United States are back to their mid-2004 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 19-20%. The recovery from the March 2012 lows is 24% for the 10-City and 20-City Composites.

New York was the only city to decline in the month of March. San Francisco posted the biggest gain of 2.4% with Seattle following at +1.9%. All 20 cities improved in March as compared to their February returns. Cleveland improved the most; it went from a decline of 1.6% in February to a gain of 1.5% in March. Cleveland and San Francisco posted their biggest returns since last June.

New York was the only city to decline in the month of March. San Francisco posted the biggest gain of 2.4% with Seattle following at +1.9%. All 20 cities improved in March as compared to their February returns. Cleveland improved the most; it went from a decline of 1.6% in February to a gain of 1.5% in March. Cleveland and San Francisco posted their biggest returns since last June.