The Mortgage Corner

Data through February 2014, released today by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices, show that the annual rates of gain posted 13.1 (in 10-city index) and 12.9 percent (20-city index) in the twelve months ending February 2014. Though some regions had flat or slightly negative readings—e.g., Cleveland and Chicago are still affected by winter weather—it is good news for sales.

caseshiller

Graph: Calculated Risk

“Prices remained steady from January to February for the two Composite indices,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The annual rates cooled the most we’ve seen in some time. The three California cities and Las Vegas have the strongest increases over the last 12 months as the West continues to lead. Denver and Dallas remain the only cities which have reached new post-crisis price peaks.”

California cities San Francisco (22.7 percent), San Diego (19.9 percent), and Los Angeles (18.2 percent) led the way, with Las Vegas (23.1 percent) still the leading the annual price increases.

The Northeast with New York, Washington and Boston are seeing some of the slowest year-over-year gains. However, even there prices are above their levels of early 2013. On a month-to-month basis, there is clear weakness. Seasonally adjusted data show prices rose in 19 cities, but a majority at a slower pace than in January.

Another reason for optimism that home sales will increase this year is inventories are increasing again. Housing Tracker (Department of Numbers) has been providing some weekly inventory data for the last several years to Calculated Risk. And inventories are up 8.2 percent already this year.

In 2011 and 2012, inventory only increased slightly early in the year and then declined significantly through the end of each year. In 2013 (Blue), inventory increased for most of the year before declining seasonally during the holidays.  Inventory in 2013 finished up 2.7 percent YoY compared to 2012. But inventory in 2014 (Red) is now 8.2 percent above the same week in 2013.

The median asking price for homes in the US peaked in June 2006 at $319,459 and is now $48,209 (15.1 percent) lower. From a low of $211,844 in January 2011, the median asking price in the US has increased by $59,404 (28.0 percent) to $273,759, says Housing Tracker.

inventory

Graph: Calculated Risk

So though the price increases had some effect on slowing sales of new and existing-home over the past several months, the severe winter weather and lower inventories have a larger effect. And don’t forget rising prices also mean rising equity levels, which means more homes are eligible for sale.

Harlan Green © 2014

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