Home prices continue to rise and at a faster pace, according to the data from the S&P CoreLogic Case-Shiller Indices. Home prices in the National Home Price NSA Index posted a 5.8 percent gain in December, up 5.6 percent from November and setting a 30 month high.
Seattle Portland and Denver had the highest year-over-year gains, at 10.8 percent, 20.0 percent and 8.9 percent, respectively.
“Home prices continue to advance, with the national average rising faster than at any time in the last two-and-a-half years,” said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. Blitzer said that after considering historical rates adjusted for inflation, “Home prices are rising, but the speed is not alarming.”
“One factor behind rising home prices is low inventory,” said Blitzer. “While sales of existing single family homes passed five million units at annual rates in January, the highest since 2007, the inventory of homes for sales remains quite low with a 3.6 month supply. New home sales at 555,000 in 2016 are up from recent years but remain below the average pace of 700,000 per year since 1990. Another factor supporting rising home prices is mortgage rates. A 30-year fixed rate mortgage today is 4.2% compared to the 6.4% average since 1990. Another indicator that home price levels are normal can be seen in the charts of Seattle and Portland OR. In the boom-bust of 2005-2009, prices of low, medium, and high-tier homes moved together, while in other periods, including now, the tiers experienced different patterns.”
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