NEW YORK CITY-Home prices in the S&P/Case-Shiller 10-City and 20-City Composites rose this past November by 13.8% and 13.7%, respectively, year over year, S&P Dow Jones Indices said Tuesday. The 20-city composite posted its best 12-month performance since February 2006, with all 20 cities in the index posting seasonally adjusted increases and nine posting non-seasonally adjusted gains.
Although the two indices showed a 0.1% decline from the prior month, a couple of cities—Dallas and Chicago—were standout performers. The Texas city posted its highest annual return, 9.9%, since the indices began, while Chicago’s annual rate of 11% was its best since December 1988. Denver also posted its best-ever return, rising 8.9% Y-O-Y.
“November was a good month for home prices,” says David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. “Despite the slight decline, the 10-City and 20-City Composites showed their best November performance since 2005. Prices typically weaken as we move closer to the winter. Las Vegas, Los Angeles and Phoenix stand out as they have posted 20 or more consecutive monthly gains.”
Beginning with June of 2012, “we saw a steady rise in year-over-year increases,” Blitzer says. November continued the trend with another strong month, “although the rate of increase slowed. Looking at the year-over-year returns, the Sun Belt continues to push ahead with Atlanta, Las Vegas, Los Angeles, Miami, Phoenix, San Diego, San Francisco and Tampa taking eight of the top nine spots. Detroit continues to recover, but remains the only city with prices below its 2000 level.”
Rick Sharga, EVP of Auction.com, says Tuesday’s Case-Shiller report is in line with what we’ve seen over the past quarter: “home price appreciation slowing down, although prices are at much higher levels than they were a year ago.” Much of the increase in home prices in 2013, he adds, was due to a rebound in the markets hit hardest during the downturn, such as the aforementioned Vegas and Phoenix.
Further, much of the rebound in those cities stemmed from the disappearance of the so-called “foreclosure discount,” says Sharga. “Distressed properties at the low end of the market were in unusually high demand, often driven by investor activity, and had enormous price increases which skewed the overall numbers a bit.”
Many of the other published home price indices exclude distressed property sales, and accordingly showed “lower home price appreciation than Case-Shiller,” he adds. “With less distressed inventory coming to market, and being less discounted when it does come to market, that factor will play much less of a role in 2014 home prices, which suggests that we shouldn’t see nearly as much appreciation this year as we did in ‘13.”