Tuesday, January 29, 2013

Home Prices Continue to Soar; Best Gains Since 2006

Data through November 2012, released today by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices showed home prices rose 4.5% for the 10-City Composite and 5.5% for the 20-City Composite in the 12 months ending in November 2012.  It was the strongest year-over-year price increase since August 2006.

In the 12 months ended in November, prices rose in 19 of the 20 cities and fell in New York.  In 19 cities prices rose faster in the 12 months to November than in the 12 months to October.

The Southwest – Las Vegas and Phoenix – are staging a strong comeback with the Southeast -- Miami and Tampa close behind.  The sunbelt, which bore the brunt of the housing collapse, is back in a leadership position.  California is also doing well while the northeast and industrial Midwest is lagging somewhat, Case-Shiller notes.

Housing is clearly recovering. Prices are rising as are both new and existing home sales. Existing home sales in November were 5.0 million, highest since November 2009. New Home sales at 398,000 were the highest since June 2010, said says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices.

The upside action comes as no surprise to EPJ Daily Alert readers. Here is what I wrote in October 2012:

This weekend at EPJ, I posted two housing stories. One about how
housing prices are soaring in the Washington D.C. area, the other
pointing out that the housing inventory in Los Angeles county, based
on the current sales rate, is only a 2 months supply. 
Both these areas, along with Silicon Valley, appear ready to really
bust out to the upside. Given the latest data on inventories across
the country (down aprox. 25% from last year), other regions of the
country will follow. I note that this is mostly a supply side
phenomena and not coming from the demand side. But the rising prices
will soon attract more buyers. 

Since that report, things have only gotten more bullish as Bernanke has turned on the money printing presses and thus adding demand side upward price action to the price action coming as a result of limited supply.

From a recent EPJ Daily Alert:
For the third week in a row, 13-week money supply (M2-nonseasonally adjusted)has come in at 11.4%. We, thus, may have hit a cruising altitude as far as annualized money printing.
Here's the climb over recent weeks.

5.1%,  5.6%,  6.6%, 7.1%,  7.5%,  7.8%,  8.2%, 8.4%,  8.7%,  9.0%,
9.3%,  9.6%,  9.9%, 10.7% 11.4% 11.4% 11.4%

The acceleration may have stopped but the cruise rate of 11.4% is very aggressive and is what is behind the strength in the equities and real estate markets.


  1. And Zero-Hedge says "Case-Shiller Home Price Index Posts Second Consecutive Monthly Decline, Average Home Prices Back To Fall 2003 Levels" http://www.zerohedge.com/news/2013-01-29/case-shiller-home-price-index-posts-second-consecutive-monthly-decline-average-home- presumably after reviewing the same data. So are values going UP or going DOWN?

  2. Zero-Hedge say just the opposite presumably after reading the same data. Which is it, UP or DOWN?http://www.zerohedge.com/news/2013-01-29/case-shiller-home-price-index-posts-second-consecutive-monthly-decline-average-home-

  3. Month to month, prices (as measured by Case-Shiller) have decreased for two months, but for the year as a whole, prices have increased 5.5% since last year.

  4. Is it because of seasonal adjustments you see an increase but looking at raw data you see a decrease? Marc Faber says real estate stocks in USA are especially vulnerable. Really confusing.