Us house prices grow at twice rate of inflation
San Francisco, where house grew at the fastest rate in 2014 Photo: Freestock.ca
The latest S&P/Case-Shiller Home Price Index, which tracks values in a range of US cities, found that prices increased in nine cities in December 2014. Both the 10-City and 20-City Composites saw year-over-year increases, with the 10-City Composite rising 4.3 per cent year-over-year, up from 4.2 per cent in November, and the 20-City Composite up 4.5 per cent, higher than November's annual 4.3 per cent increase.
The fastest year-over-year gains were in San Francisco and Miami, where prices rose 9.3 per cent and 8.4 per cent respectively over the last 12 months. 12 cities, including Cleveland, Denver, and Seattle, saw prices rise faster in the year to December than a month earlier, while Las Vegas led the declining annual returns with 6.9 per cent.
"The housing recovery is faltering," says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.
"While prices and sales of existing homes are close to normal, construction and new home sales remain weak. Before the current business cycle, any time housing starts were at their current level of about one million at annual rates, the economy was in a recession."
The softness in housing is despite favorable conditions elsewhere in the economy, he adds, citing strong job growth, falling unemployment and low interest rates.
"Movements in home prices show clear regional patterns," he adds.
Indeed, the western half of the nation plus Miami and Atlanta enjoyed year-over-year increases of 5 per cent or more. San Francisco and Miami were the strongest. Dallas, Denver, Las Vegas and Atlanta also experienced solid gains. Phoenix was an exception to the western strength with only a 2.4 per cent increase; San Diego was a bit under 5 per cent at 4.8 per cent.
The Midwest and Northeast, on the other hand, lagged, with Boston recording the strongest growth of just 3.8 per cent.
"The regional patterns and the weakness in new construction and new sales may reflect decreasing mobility – fewer people moving to different parts of the country or seeking jobs in different regions," comments Blitzer.