Home Prices Surge in January

Seattle, Las Vegas, and San Francisco reported the highest year-over-year gains among the 20 cities with gains of 12.9 percent, 11.1 percent, and 10.2 percent, respectively.

“Since the market bottom in December 2012, the S&P Corelogic Case-Shiller National Home Price index has climbed at a 4.7 percent real – inflation adjusted – annual rate,” said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “That is twice the rate of economic growth as measured by the GDP. While price gains vary from city to city, there are few, if any, really weak spots.”

“Two factors supporting price increases are the low inventory of homes for sale and the low vacancy rate among owner-occupied housing. The current months of supply — how many months at the current sales rate would be needed to absorb homes currently for sale — is 3.4; the average since 2000 is 6.0 months, and the high in July 2010 was 11.9. Currently, the homeowner vacancy rate is 1.6 percent compared to an average of 2.1 percent since 2000; it peaked in 2010 at 2.7 percent.

“Despite limited supplies, rising prices and higher mortgage rates, affordability is not a concern. Affordability measures published by the National Association of Realtors show that a family with a median income could comfortably afford a mortgage for a median-priced home.”