Home Prices Rise At 8.0% Annual Rate Over Last Six Months
U. S. Home prices rose for the sixth consecutive month in October according to a report released on December 29, 2009 By S&P.
Seasonally adjusted home prices in October of 2009 rose 0.4% from the prior month according to data released by Standard and Poor’s in its 20-City Composite S&P/ Case-Shiller® Home Price Index.
Home prices have now risen six months in a row for a total of +4.0% for the six months, or an annual rate of increase over the period of +8.0%.
There were monthly increases in October in 11 of the 20 markets tracked. One market was unchanged, and 8 fell.
However, because of price declines in the previous 6 months, the price index still fell by 7.3% year-over-year during the 12 months ending in October 2009.
We predict that the 20-City Composite Index will achieve its first year-over-year increase since 2007 in the January 2010 report. We expect the increase to be in the range of +0.5% to +2.0%.
Our methodology is straightforward and simple minded. By examining the prior monthly decreases it is possible to predict when we will see year-over-year gains in this index: November 2008 was -2.2%, December 2008 was -2.6%, and January 2009 was -2.8%, which totals -7.6%. So by simple math, if prices for the next three months remained flat, we would see a 0.3% year-over-year increase in the 12-month period ending in January 2010 as the prior-year decreases drop out of the calculation and are replaced with zeroes. And, if prices rise the same the next three months as they did in the last three, an increase of +1.6%, then the Year-over-year increase would be 1.9%.
The index tracks quality-adjusted actual resale home closing prices for thousands of existing single-family homes in 20 metropolitan areas. The index excludes condos, coops, and new construction.
By tracking price changes of specific, individual homes over time, the index attempts to eliminate the problem of unreliable home price averages caused by the changing mix of homes sold in different time periods. (For example, in weak markets, a greater proportion of small, starter homes are typically sold, reducing average prices even though the prices of specific homes may be unchanged or even increased.)
The dramatic improvement in the S&P/Case-Shiller® Home Price Index provides more evidence that the housing market is continuing to heal from the worst decline in housing activity in decades.
Furthermore, it suggests that prospective homebuyers waiting for lower prices may be disappointed.
With 30-year fixed mortgage interest rates now near 5% and rising, and the supply of homes beginning to dwindle, delaying a home purchase may prove to be an unwise strategy.
See the full release:
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