Looking at recent reports on home prices, the latest data on new home sales and what it means for housing…
We have many different things to cover today so pour yourself a big glass of your favorite beverage. Let’s look at the big news for home prices, new home sales and talk about what it means for real estate and more importantly for buyers and sellers!
Case Shiller Home Price Index December 2013
Kicking things off is the latest news from the S&P/Case Shiller Home Price Indices. Remember that Case Shiller is a 3 month average so they are actually talking about October, November and December. The highlights:
- US home prices closed the year of 2013 up 11.3%
- December 2013 average US home prices are back to their mid-2004 levels
- In the fourth quarter of 2013, the National Index declined 0.3%
- The December 2013 20-City Index is up 13.4% YOY
- The December 2013 10-City Index is up 13.6% YOY
Nice to hear some good news for home prices after the bad stuff I discussed on Monday. Check out the chart showing the 20-City Index:
And the chart for the 10-City index:
and finally the chart showing the Case Shiller National Composite Home Price Index:
David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices said:
The S&P/Case-Shiller Home Price Index ended its best year since 2005. However, gains are slowing from month-to-month and the strongest part of the recovery in home values may be over. Year-over-year values for the two monthly Composites weakened and the quarterly National Index barely improved. The seasonally adjusted data also exhibit some softness and loss of momentum.
Well what a party pooper! But the truth is that the increases in US home prices have been slowing down. I certainly don’t want to see another bubble in home prices. As long as home prices are increasing I will be happy. I would be happier if house prices increase a tad bit more than inflation.
Black Knight Home Price Index December 2013
If you are wondering who the heck Black Knight is, that is the new name for LPS. I have followed the LPS Home Price Index for several years. Not sure why LPS sold this part of their business but the data is still good. Anyway, Black Knight reported:
- The average price of a home in December 2013 is up 8.4% YOY
- The average price of a home in December 2013 is up 0.1% from November 2013
Again we see that the rate of increases in home prices appears to be slowing down. Like I said, as long as we are still headed in the right direction I am happy.
FHFA House Price Index
The FHFA also released a report on US home prices this week. they said:
- US house prices rose 1.2% in the fourth quarter of 2013 from the previous quarter
- US house prices rose 7.7% from the 4th quarter of 2012 to the 4th quarter of 2013
FHFA Principal Economist Andrew Leventis said:
Home price appreciation in the fourth quarter was considerable, but more modest than in recent periods. It is too early to know whether the lower quarterly growth rate represents the beginning of more normalized price appreciation patterns or a more significant slowdown.
Wait a minute. Did he say “significant slow down”? I don’t like the sound of that and prefer the phrase “more normalized price appreciation”. Less bubbly and more sustainable is always better in my book.
Check out the chart:
Department of Numbers on Home Prices
I thought I would throw this one in for extra credit. Department of Numbers is reporting:
- Median Asking Price for February 24 2014 is UP 10.9% YOY
While asking prices are not as relevant to me as sold prices, it is yet another indicator that house prices are still headed in the right direction.
New Home Sales
The Census Bureau and HUD released their report on New Home Sales today. They said:
- Sales of new single-family houses in January 2014 were 9.6% higher than December 2013
- Sales of new single-family houses in January 2014 were 2.2% higher than January 2013
- The median sales price of new houses sold in January 2014 was $260,100
- The average sales price of new houses sold in January 2014 was $322,800
Check out the chart:
As you can see, we are still much lower than before the housing bubble burst. However this is the highest sales rate since 2008. Which is a good way to start 2014!
The Take Away
Quite a few positive reports on home price. But these reports are NOT talking your local real estate market. So while it is good news for the economy and housing, it isn’t everything you need to know. Always rely upon someone with expertise in your local real estate market and not the national reports when making decisions about buying or selling.
Home Prices in Timbuktu Have NO Bearing on What Your Home Will Sell For!
It appears that some of the recent negative news about housing may be premature. Sure the way home prices have been increasing appears to be slowing down. But that is probably a good thing. Why?
With both home prices and mortgage rates rising, it could mean mean the housing market will experience a slowdown. With the real estate market still not fully recovered, we don’t want to see a relapse!