Seasonal lulls in house hunting will not slow the US real estate market recovery, according to experts. The S&P/Case-Shiller index indicated a dip in October 2012 that correlated with historical seasonal dips, but analysts are convinced the recovery will continue unabated. The index measured quarterly and yearly metrics, and it is the year-on-year gains in several cities surveyed that lead many to have more faith in the recovery. Other strong indicators include gains in areas that have long suffered stagnation as well as big rebounds in areas that were among the lowest performers in the nation. For more on this continue reading the following article from Property Wire.
Anticipated seasonal weakness hit the US residential property market in October as a number of cities saw prices fall, according to the latest index from S&P/Case-Shiller, but the housing recovery is well underway.
Some 12 of the 20 cities and both Composites posted monthly declines in home prices in October, both down 0.1%. But on an annual basis the 10 and 20 City Composites recorded positive returns of 3.4% and 4.3%, larger than the 2.1% and 3% annual rates posted for September 2012.
In 19 of the 20 cities, annual returns in October were higher than September. Chicago and New York were the only two cities with negative annual returns in October.
‘Phoenix home prices rose for the 13th month in a row. San Diego was second best with nine consecutive monthly gains.
The October monthly numbers were weaker than September as 12 cities saw prices drop compared to seven the month before,’ said David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices.
The five which turned down in October but not in September, were Atlanta, Dallas, Miami, Minneapolis and Seattle. Among all 20 cities, Chicago was the weakest with prices dropping 1.5%, followed by Boston where prices fell 1.4%. Las Vegas saw the strongest one month gain with prices up 2.8%.
Annual rates of change in home prices are a better indicator of the performance of the housing market than the month on month changes because home prices tend to be lower in fall and winter than in spring and summer,? explained Blitzer.
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Both the 10 and 20 City Composites and 19 of 20 cities recorded higher annual returns in October 2012 than in September. The impact of the seasons can also be seen in the seasonally adjusted data where only three cities declined month on month.
The 10 City Composite annual rate increase of 3.4% in October was lower than the 20 City Composite annual figure of 4.3% because the two weaker cities, Chicago and New York, have higher weights in the 10 City Composite.
‘Looking over this report, and considering other data on housing starts and sales, it is clear that the housing recovery is gathering strength. Higher year on year price gains plus strong performances in the southwest and California, regions that suffered during the housing bust, confirm that housing is now contributing to the economy,’ Blitzer pointed out.
‘One indication of the rebound is the gains from the bottom. The largest rebound is 24.2% in Detroit even though prices there are still about 20% lower than 12 years ago. San Francisco and Phoenix have also rebounded from recent lows by 22.5% and 22.1% with prices comfortably higher than 12 years ago,’ he said.
‘The smallest recoveries are seen in Boston and New York, two cities in the northeast which suffered smaller losses in the housing bust than the sunbelt or California,’ he added.
As of October 2012, average home prices across the United States are back to their autumn 2003 levels for both the 10 City and 20 City Composites. Measured from their June/July 2006 peaks, the decline for both Composites is approximately 30% through October 2012 and approximately 35% from the June/July 2006 peak values to their recent lows in early 2012. The October 2012 levels for both Composites are about 8.4 to 9% above their early 2012 lows.
In October 2012, 12 MSAs and both Composites posted negative month on month returns. Detroit, Las Vegas, Los Angeles, Phoenix, Portland, San Diego and San Francisco were the only seven cities that recorded positive monthly returns. Denver remained flat.
After 22 consecutive months, the Las Vegas index, at 100.14, finally recovered to a level above its January 2000 figure. Atlanta and Detroit remain the only two cities with average home prices below their January 2000 levels.
This article was republished with permission from Property Wire.