West drives house price growth in us
Photo: JeffGunn
The West is driving house price growth in the USA, according to new figures, as San Francisco's market continues to heat up.
The latest S&P/Case-Shiller index shows that home prices have continued their rise across the country over the last 12 months, with values up by an average 4.7 per cent in July 2015, slightly higher than 4.5 per cent recorded in June 2015.
The growth is being led by the West, with San Francisco, Denver and Dallas reported the highest year-over-year gains among the 20 cities with price increases of 10.4 per cent, 10.3 per cent, and 8.7 per cent, respectively. 14 cities reported greater price increases in the year ending July 2015 over the year ending June 2015.
San Francisco and Denver are the only cities with a double digit increase, and Phoenix had the longest streak of year-over-year increases. Phoenix reported an increase of 4.6 per cent in July 2015, the eighth consecutive year-over-year increase. Boston posted a 4.3 per cent annual increase, up from 3.2 per cent in June 2015; this is the biggest jump in year-over-year gains this month.
Since 2000, California has been home to the three fastest-rising price. The two smallest gains since January 2000 have been recorded in Detroit (3 per cent) and Cleveland (10 per cent). The Sunbelt cities - Miami, Tampa, Phoenix and Las Vegas – which were the poster children of the housing boom have yet to make new all-time highs.
"Prices of existing homes and housing overall are seeing strong growth and contributing to recent solid growth for the economy," says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.
"The S&P/Case Shiller National Home Price Index has risen at a 4 per cent or higher annual rate since September 2012, well ahead of inflation. Most of the strength is focused on states west of the Mississippi."
"The economy grew at a 3.9 per cent real annual rate in the second quarter of 2015 with housing making a major contribution," he adds. "Residential investment grew at annual real rates of 9-10 per cent in the last three quarters (2014:4th quarter, 2015:1st-2nd quarters), far faster than total GDP. Further, expenditures on furniture and household equipment, a sector that depends on home sales and housing construction, also surpassed total GDP growth rates."
The figures follow other positive indicators of current and expected future housing activity, including a rise in sales of new and existing housing, according to the National Association of Realtors and National Association of Home Builders sentiment index.
Indeed, Blitzer notes that many analysts are confident that the looming interest rate increase "is not likely to derail the strong housing performance".