Steel Markets
Home Prices Gain 5.9% in January
Written by Sandy Williams
March 29, 2017
Home prices in January gained 5.9 percent annually, according to the latest S&P CoreLogic Case-Shiller National Home Price Index. The January data shows home prices were at a 31-month high and continuing on a positive trend despite tight inventory.
On a year-over-year basis, the 20-city composite was up 5.7 percent compared to 5.5 percent in December. Month-over-month, the 20-city and 10-city composites each increased 0.9 percent on a seasonally adjusted basis.
“Housing and home prices continue on a generally positive upward trend,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The recent action by the Federal Reserve raising the target for the Fed funds rate by a quarter percentage point is expected to add less than a quarter percentage point to mortgage rates in the near future. Given the market’s current strength and the economy, the small increase in interest rates isn’t expected to dampen home buying. If we see three or four additional increases this year, rising mortgage rates could become concern.
“While prices vary month-to-month and across the country, the national price trend has been positive since the first quarter of 2012. In February, the inventory of homes in the market represented 3.7 months of sales, lower than the long-term average of six months. Tight supplies and rising prices may be deterring some people from trading up to a larger house, further aggravating supplies because fewer people are selling their homes. The prices also hurt affordability as higher prices and mortgage rates shrink the number of households that can afford to buy at current price levels. At some point, this process will force prices to level off and decline – however we don’t appear to be there yet.”
Sandy Williams
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