New York —The Standard & Poor’s/Case-Shiller 20-city home price index declined 0.1% from November to December, matching the previous month’s decline. The figures come after other reports show that home sales and construction have slowed after strong gains last year. Most economists expect the housing recovery will continue this year, though likely at a slower pace.
Data through December 2013 showed the National home prices closed the year of 2013 up 11.3%. This represents a slight improvement over last quarter’s annual rate of 11.2%. In the fourth quarter 2013, the National Index declined 0.3%.
“The S&P /Case-Shiller Home Price Index ended its best year since 2005,” says David M Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, “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.
After 26 months of consecutive gains, Phoenix posted -0.3% for the month of December, its largest decline since March 2011. Phoenix once led the recovery from the bottom in 2012, but in Las Vegas, Los Angeles and San Francisco were the top three performing cities of 2013 with gains of over 20%. The Sun Belt, with the exception of Dallas, Miami and Tampa, saw lower annual rates in December when compared to their November numbers. The six cities with the highest year-over-year figures saw their rates decline (Las Vegas, San Francisco, Los Angeles, Atlanta, San Diego, and Detroit) and most cities ranked at the bottom improved (Denver, Washington and New York) – Charlotte and Cleveland were the two exceptions.
“Recent economic reports suggest a bleaker picture for housing. Existing home sales fell 5.1% in January from December to the slowest pace in over a year. Permits for new residential construction and housing starts were both down and below expectations. Some of the weakness reflects the cold weather in much of the country. However, higher home prices and mortgage rates are taking a toll on affordability. Mortgage default rates, as shown by the S&P/ Experian Consumer Credit Default Index, are back to their pre-crisis levels but bank lending standards remain strict,” Blitzer says.
Only six cities – Dallas, Las Vegas, Miami, San Francisco, Tamp and Washington – posted gains for the month of December. Miami held its lead position with an increase of 0.9% followed by Las Vegas at +0.4%. Atlanta, Detroit and Los Angeles remained relatively unchanged – Detroit remains the only city below its January 2000 level. Although Chicago declined 0.5%, the city improved considerably from its decline of 1.2% last month. Cleveland posted the largest decline – it also showed the most deceleration with a gain of 0.2% in November to a 1.2% decline in December.
All 20 cities in the composite index showed positive year–over-year increases.