More evidence emerged Tuesday that home prices are finding solid ground, as the S&P/Case-Shiller home price index reported small gains in August for its 10- and 20-city indices of 1.3% and 1.2% respectively.
According to Case-Shiller data, 17 of 20 major metro housing markets tracked by the index posted monthly gains at summer’s end. Just Charlotte (down 0.4%), Cleveland (off 0.5%), and Las Vegas (down 0.3%) reported month-over-month declines, all of which were relatively small falls in value.
Minneapolis again proved the top performer, with a monthly increase of 3.2% in August.
“Broadly speaking, the rate of annual decline in home price values continues to improve,” said David M. Blitzer, chairman of Standard & Poor’s Index Committee. “While many of the markets remain down versus this time last year, the relative rate of decline has shown some real improvement. California, in particular, has seen some real positive prints in recent months.”
Case-Shiller separates its data into two groups. Its 10-city composite index, which includes Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, D.C., rose 1.3% in August on a monthly basis.
The annual rate of decline has improved as well. Year-over-year, the 10-city composite fell 10.6% while the 20-city composite dropped 11.3%, both of which are significant improvements compared to the record annual declines that have been posted during the downturn by the Case-Shiller indices.
With some economists warning of a coming double-dip in home prices, though, Blitzer noted the risks to continue home price growth. “We do want to remind people of the upcoming expiration of the federal first-time buyer’s tax credit in November and anticipated higher unemployment rates through year-end,” he said. “Both may have a dampening effect on home prices.”
Congress is currently discussing whether to extend and perhaps expand the credit beyond its Nov. 30 deadline.
The S&P/Case-Shiller home price index incorporates home value data on all homes sold (including those with jumbo loans) in 20 major housing markets around the country. It typically shows more dramatic home price changes than the Federal Housing Finance Agency home price index, which is based on the purchase prices of homes with loans owned or guaranteed by Freddie Mac and Fannie Mae in all 50 states.
Alison Rice is senior editor, online, at BUILDER magazine.