It’s Official! Prices Increased a Lot Last Year

The major national home price reports agree on trends but never agree on numbers because their data comes from different places and are manipulated differently to create the most accurate results. Yesterday S&P Case-Shiller announced 20012’s gain was 7.3 percent. The federal government’s index showed a 5.5 percent gain.

The Federal Housing Finance Agency’s (FHFA) seasonally adjusted purchase-only house price index (HPI) reported prices rose 1.4 percent from the third quarter to the fourth quarter and rose 5.5 percent from the fourth quarter of 2011 to the fourth quarter of 2012.

The three S&P/Case-Shiller Home Price Indices’ headline composites ended the year with strong gains. The national composite posted an increase of 7.3 percent for 2012. In addition to the three composites, nineteen of the 20 MSAs posted positive year-over-year growth - only New York fell.

“Home prices ended 2012 with solid gains,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Housing and residential construction led the economy in the 2012 fourth quarter.

In December’s report all three headline composites and 19 of the 20 cities gained over their levels of a year ago. Month-over-month, 9 cities and both Composites posted positive monthly gains. Seasonally adjusted, there were no monthly declines across all 20 cities.

“The National Composite increased 7.3 percent over the four quarters of 2012. From its low in the first quarter, it surged in the second and third quarter and slipped slightly in the 2012 fourth period. The 10- and 20-City Composites, which bottomed out in March 2012 continued to show both year-over-year and monthly gains in December. These movements, combined with other housing data, suggest that while housing is on the upswing some of the strongest numbers may have already been seen.

“Atlanta and Detroit posted their biggest year-over-year increases of 9.9 percent and 13.6 percent since the start of their indices in January 1991. Dallas, Denver, and Minneapolis recorded their largest annual increases since 2001. Phoenix continued its climb, posting an impressive year-over-year return of 23.0 percent; it posted eight consecutive months of double-digit annual growth.” Blitzer said.

As of the fourth quarter of 2012, average home prices across the United States are back at their autumn 2003 levels. At the end of the fourth quarter of 2012, the National Index was down 0.3 percent over the third quarter of 2012 and 7.3 percent above the fourth quarter of 2011

“The fourth quarter was another strong one for house prices, as it was the third consecutive quarter where U.S. price growth exceeded one percent,” said FHFA Principal Economist Andrew Leventis. “While a significant number of homes remained in the foreclosure pipeline, the actual number of homes available for sale was very low and fell over the course of the quarter.”

FHFA’s expanded-data house price index rose 1.6 percent over the latest quarter. Over the latest four quarters, that index is also up 5.5 percent. While the national, purchase-only house price index rose 5.5 percent from the fourth quarter of 2011 to the fourth quarter of 2012, prices of other goods and services rose 1.7 percent over the same period. Accordingly, the inflation-adjusted price of homes rose approximately 3.7 percent over the latest year.

Significant findings from the FHFA index:

The seasonally adjusted purchase-only HPI rose in the fourth quarter in 38 statesand the District of Columbia.

Of the nine census divisions, the Pacific division experienced the strongest increase in the latest quarter, posting a 4.2 percent price increase. House prices were weakest in the East North Central division, where prices remained unchanged fromthe prior quarter.

As measured with purchase-only indexes for the 25 most populated metropolitan areas in the U.S., fourth quarter price increases were greatest in the Phoenix-Mesa-Glendale, AZ Metropolitan Statistical Area (MSA). That area saw prices increase by 6.8 percent between the third and fourth quarters. Prices were weakest in the Edison-New Brunswick, NJ metropolitan division, where prices fell 0.8 percent over that period.

The monthly seasonally adjusted purchase-only index for the U.S. has increased for 11 consecutive months.

FHFA’s new “distress-free” house price index suggests that price gains in the latest quarter may be partially attributed to decreases in the share of distressed sales in the latest quarter. For 9 of the 12 metropolitan areas covered by the new set of indexes, the distress-free measures-which remove the direct effect of short sales and sales of bank-owned properties-showed more modest price gains than were evident in the traditional purchase-only indices.

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