Home Prices Rise At 7.2% Annual Rate Over Last Seven Months
Seasonally adjusted home prices in November of 2009 rose 0.2% from the prior month according to data released on January 26, 2010 by Standard and Poor’s in its 20-City Composite S&P/ Case-Shiller® Home Price Index.
There were monthly increases in November in 14 of the 20 markets tracked. Six of the markets fell.
Home prices have now risen seven months in a row for a total of +4.2% for the seven months, or an annual rate of increase over the period of +7.2%.
However, because of price declines in the previous 5 months, the price index still fell by 5.3% year-over-year during the 12 months ending in November 2009.
We predict that the 20-City Composite Index will achieve its first year-over-year increase since 2007 in the January 2010 report. We expect the increase to be in the range of +0.1% to +1.0%.
Our methodology is straightforward and simple minded. By examining the prior monthly decreases it is possible to predict when we will see year-over-year gains in this index: December 2008 was -2.6%, and January 2009 was -2.8%, which totals -5.4%. So by simple math, if prices for the next two months remained flat, we would see a +0.1% year-over-year increase in the 12-month period ending in January 2010 as the large prior-year decreases drop out of the calculation and are replaced with zeroes. And, if prices rise the same the next two months as they did in the last two, an increase of +0.5%, then the Year-over-year increase would be +0.6%.
The index tracks quality-adjusted actual resale home closing prices for thousands of existing single-family homes in 20 metropolitan areas. The index excludes condos, coops, and new construction.
By tracking price changes of specific, individual homes over time, the index attempts to eliminate the problem of unreliable home price averages caused by the changing mix of homes sold in different time periods. (For example, in weak markets, a greater proportion of small, starter homes are typically sold, reducing average prices even though the prices of specific homes may be unchanged or even increased.)
The dramatic improvement in the S&P/Case-Shiller® Home Price Index provides more evidence that the housing market is continuing to heal from the worst decline in housing activity in decades.
Furthermore, it suggests that prospective homebuyers waiting for lower prices may be disappointed.
With 30-year fixed mortgage interest rates now near 5% and rising, and the supply of homes beginning to dwindle, delaying a home purchase may prove to be an unwise strategy.
See the full release: http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245205349706&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true
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