Western Cities Lead Home Price Gains

NEW YORK CITY—Although home prices rose across all regions of the country in July, the real gainers for the month were west of the Mississippi, S&P Dow Jones Indices said Tuesday. San Francisco, Denver and Dallas reported the highest year-over-year gains in the S&P/Case-Shiller 20-City Composite index, while 14 cities in the index reported greater Y-O-Y gains in July than in June.

With Y-O-Y gains of 10.4% and 10.3%, respectively, San Francisco and Denver are the only cities with a double-digit increase, according to S&P Dow Jones. Phoenix reported an increase of 4.6% Y-O-Y in July, representing the longest streak in consecutive annual gains at eight months. Boston's Y-O-Y increase rose to 4.3% from 3.2% in June, for the biggest increase in Y-O-Y gains this month.

Results were mixed among the three S&P/Case-Shiller indices. The US National Home Price Index rose 4.7% Y-O-Y in July, slightly higher than the 4.5% increase in June, while the 10-City Composite was virtually unchanged from the previous month at 4.5%. The 20-City Composite posted higher Y-O-Y gains at 5.0%.

“Prices of existing homes and housing overall are seeing strong growth and contributing to recent solid growth for the economy,” says David 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% or higher annual rate since September 2012, well ahead of inflation.”

Over that time period, consistent with July's results, “most of the strength is focused on states west of the Mississippi,” Blitzer adds. “The three cities with the largest cumulative price increases since January 2000 are all in California: Los Angeles (138%), San Francisco (116%) and San Diego (115%). The two smallest gains since January 2000 are Detroit (3%) and Cleveland (10%).” He notes that “the poster children of the housing boom”—Miami, Tampa, Phoenix and Las Vegas—have yet to make new all-time highs.

Commenting on the latest S&P/Case-Shiller results, IHS Global Insight's Patrick Newport and Kristin Reynolds note that July's Y-O-Y growth in the National Home Price Index rep[resented the fastest pace in 10 months. “While the FHFA House Price Index points to national price growth about 1.0 percentage point higher, we consider the 4.2% to 5.2% range to be well-balanced between the needs of sellers and those of buyers,” write Newport and Reynolds, US economists with IHS. “We expect the housing market to continue to make progress amid the backdrop of improving demographics and incomes, and moderate price appreciation.”