S&P CoreLogic Case-Shiller: Annual Home Prices Hit 31-Month High

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index covering all 9 U.S. census divisions rose 5.9% on an annual basis and set a 31-month high. That’s up from 5.7% last month, while the original 10-City Composite index posted a 5.1% annual increase, up from 4.8% the previous month.

The 20-City Composite reported a higher year-over-year gain of 5.7% than expected, up from 5.5% in December.

“Housing and home prices continue on a generally positive upward trend,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The recent action by the Federal Reserve raising the target for the Fed funds rate by a quarter percentage point is expected to add less than a quarter percentage point to mortgage rates in the near future. Given the market’s current strength and the economy, the small increase in interest rates isn’t expected to dampen home buying. If we see three or four additional increases this year, rising mortgage rates could become concern.”

Seattle, Portland, and Denver reported the highest year-over-year gains among the 20 cities over each of the last 12 months. In January, Seattle led the way with an 11.3% year-over-year price increase, followed by Portland with 9.7%, and Denver with a 9.2% increase. Twelve cities reported greater price increases in the year ending January 2017 versus the year ending December 2016.

The 3.7-month inventory on the market is lower than the annual 6-month average, which could cause upward pressure on prices in the future.

“Tight supplies and rising prices may be deterring some people from trading up to a larger house, further aggravating supplies because fewer people are selling their homes,” Mr. Blitzer said. “The prices also hurt affordability as higher prices and mortgage rates shrink the number of households that can afford to buy at current price levels. At some point, this process will force prices to level off and decline – however we don’t appear to be there yet.”