The Scotsman Guide - Victor Whitman - 26 October 2016
Home prices continued to rise at a strong pace in August, according to the S&P CoreLogic Case-Shiller indices and government studies.
U.S. national home prices made an annual gain of 5.3 percent in August, which was up from the 5 percent annual gain in July, Case-Shiller reported. Home prices also accelerated in the major cities. Case-Shiller’s 10-city and 20-city composite indices posted annual gains of 4.3 percent and 5.1 percent in August, Case-Shiller reported.
Prices are rising the fastest in Portland (up 11.7 percent annually), Seattle (up 11.4 percent) and Denver (up 8.8 percent), Case-Shiller said.
“Supported by continued moderate economic growth, home prices extended recent gains,” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “All 20 cities saw prices higher than a year earlier with 10 enjoying larger annual gains than last month,” Blitzer continued.
Blitzer said that the data on home sales, new-home construction permitting and affordability suggests "a reasonably health" housing market.
The Federal Housing Finance Agency (FHFA) reported even stronger annual gains in August. Overall home prices rose 6.4 percent compared to August 2015, but he gains were uneven across regions, FHFA said. Annual price growth ranged from 3.3 percent in the mid-Atlantic region to 7.9 percent in the Pacific region. FHFA’s indices are based on Fannie Mae and Freddie Mac loan data.
Although many analysts have raised red flags about rising prices, not all agree that it is a problem. The title company First American Corp. estimated that nominal house prices rose 5.7 percent annually, but those gains have been offset by rising wages and low rates.
Home prices in real terms decreased by 2.6 percent annually in August, First American’s Chief Economist Mark Fleming said.
“Contrary to popular opinion, housing isn’t getting more expensive,” Fleming said. “In fact, on a purchasing-power adjusted basis, housing is becoming more affordable.”