Home prices improved for the sixth consecutive month in September, according to the S&P/Case-Shiller home price index, released Tuesday. The report was strong enough to prompt David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, to declare that “we are now in the midst of a recovery in the housing market.”
All three composite indices and 17 of the 20 metro areas tracked posted year-over-year improvements, and on a monthly basis numbers were up in 13 cities and both the 10- and 20-city composites.
The S&P/Case-Shiller National Index has risen 3.6% over the past year. That number was only slightly higher than the estimate from the Federal Housing Finance Agency’s (FHFA) expanded-data house price index, also released Tuesday, which tracks data on mortgages held by Fannie Mae, Freddie Mac, and FHA, as well as county recorder offices; that index reported a 3.3% year-over-year improvement in the latest quarter. Among mortgages held by Fannie and Freddie alone, home prices were up 4.0% year over year in the third quarter, although the index missed expectations in September with only a 0.2% gain.
The progress in home prices is leading to improvements on multiple fronts, says Patrick Newport, U.S. economist at IHS Global Insight, who attributes the price gains to low interest rates, declining inventories, and investors buying distressed properties in bulk.
“Higher home prices lifted over 1.0 million homeowners above the water line during the first three quarters of this year, according to CoreLogic,” Newport wrote in a report this morning discussing the numbers. “Higher prices are giving home builders more leeway in raising prices—incentivizing them to ramp up on housing starts. Higher prices are also boosting home sales by nudging fence sitters, who up to now have been waiting for home prices to bottom out before jumping into the market. Finally, higher home prices are lubricating the labor market by making it less painful for some underwater homeowners to take better-paying jobs.”
See the full reports from both S&P and FHFA discussing home prices in September.
Claire Easley is a senior editor at Builder.