Index Pundit: Home Price Surge May Be Over
Home prices increased 11.3% in 2013, according to a S&P/Case-Shiller Home Price Index report (link opens as PDF) released today.
"The S&P/Case-Shiller Home Price Index ended its best year since 2005," said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, in a statement. "However, gains are slowing from
month-to-month and the strongest part of the recovery in home values may be over."
After increasing a revised seasonally adjusted 0.6% for November, the index's 20-city home price composite added another 0.8% for 2013's final month. Analysts had expected slightly more subdued 0.6% growth for December.
Looking at nonseasonally adjusted numbers, the report doesn't look as good. The index's 20-city home price composite dropped 0.1%, mirroring its November contraction. Year-over-year, December's growth clocked in at 13.4%, another dip from November's 13.7% YOY growth.
While Blitzer didn't discount cold weather as a reason for the recent slowdown, the chairman pointed to several trouble signs for the housing market:
Existing home sales fell 5.1% in January from December to the slowest pace in over a year. Permits for new residential construction and housing starts were both down and below expectations. Some of the weakness reflects the cold weather in much of the country. However, higher home prices and mortgage rates are taking a toll on affordability. Mortgage default rates, as shown by the S&P/Experian Consumer Credit Default Index, are back to their pre-crisis levels but bank lending standards remain strict.
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