Dive Brief:
- Driven by increased demand and limited inventory, home prices in 20 U.S. cities rose 5% in July from the same month in 2014, while prices rose 4.7% nationally, according to the S&P/Case-Shiller Home Price Index.
- Denver (10.4%) and San Francisco (10.3%) saw the greatest year-over-year gains; Washington (1.7%) rose the least; and Phoenix recorded its eighth consecutive annual gain, the longest streak of any city on the index.
- The national Home Price Index measures all nine U.S. census divisions and has increased by more than 4% since September 2012, according to David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.
Dive Insight:
The 5% July increase was in line with the median estimate (5.2%) of economists surveyed by Bloomberg. Economists said the latest increase represents a stable rebound in the housing market.
Year-to-year increases have come in near the 5% range since February, and, despite the high demand and low inventory, Bloomberg attributed the continued gains to low mortgage rates, steady job gains, rental inflation and easing of tight credit standards.
"Home prices are rising but not at a rate that’s necessarily damaging to affordability and confidence in the market," said Tom Simons, an economist at Jefferies LLC in New York. "The market overall is doing quite well."
On a seasonally adjusted, month-to-month basis, home prices fell in 10 of the 20 cities, but, according to Case-Shiller, the year-over-year measure is based on records dating back to 2001 and is a better indication of pricing trends.
