U.S. home prices increased 0.1% in December compared with November and increased 5.4% compared with December 2014, according to the S&P/Case-Shiller home price index.
The index’s 10-city composite increased 0.1% compared with November and increased 5.1% compared with December 2014, while the 20-city composite was flat compared with December and increased 5.7% compared with December 2014.
Portland, San Francisco and Denver continued to report the highest year-over-year gains. Portland led the way with an 11.4% year-over-year price increase, followed by San Francisco with 10.3% and Denver with 10.2%.
Phoenix had the longest streak of year-over-year increases, reporting a gain of 6.3% in December. It was the 12th consecutive increase in annual price gains for that city. Detroit posted a 7.1% year-over-year increase, up from 6.3%. It was the largest annual increase for a city in December.
“While home prices continue to rise, the pace is slowing a bit,” says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a statement. “Seasonally adjusted, Miami had lower prices this month than last and 10 other cities saw smaller increases than last month. Year-over-year, seven cities saw the rate of price increases wane. Even with some moderation, home prices in all but one city are rising faster than the 2.2% year-over-year increase in the CPI core rate of inflation.
“Sparked by the stock market’s turmoil since the beginning of the year, some are concerned that the current economic expansion is aging quite rapidly,” Blitzer says. “The recovery is six years old, but recoveries do not typically die of old age. Housing construction, like much of the economy, got off to a slow start in 2009-2010 and is only now beginning to show some serious strength. Continued increases in prices of existing homes, as shown in the S&P/Case-Shiller Home Price Indices, should encourage further activity in new construction.”
Blitzer adds that housing starts “have stayed above an annual rate of one million starts per year since last March and [starts of] single-family homes have been higher than 700,000 units at annual rates since June. Housing investment continues its positive contribution to GDP growth.”