U.S. home prices have now fully recovered from the effects of the Great Recession.
That’s according to the S&P CoreLogic Case-Shiller national home price index report, which shows that home prices increased 0.8% on an adjusted basis in November compared with October and increased 5.6% compared with November 2015.
The index’s 10-city composite and 20-city composite each posted a 0.9% increase, on an adjusted basis, month over month.
On a year-over-year basis, the 10-city composite increased 4.5%, while the 20-city composite increased 5.3%.
Of course, that doesn’t mean home prices have returned to their pre-recession levels in every area – just that the average U.S. home price is back to where it once was.
Seattle; Portland; Ore.; and Denver saw the highest year-over-year gains among the 20 cities during the 10 months ended in November. Seattle led the way with a 10.4% year-over-year increase, followed by Portland with 10.1% and Denver with 8.7%.
Eight cities reported greater price increases in the year ended in November versus the year ended October.
“With the S&P CoreLogic Case-Shiller National Home Price Index rising at about 5.5 percent annual rate over the last two-and-a-half years and having reached a new all-time high recently, one can argue that housing has recovered from the boom-bust cycle that began a dozen years ago,” says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a release. “The recovery has been supported by a few economic factors: low interest rates, falling unemployment and consistent gains in per-capita disposable personal income.
“Thirty-year, fixed-rate mortgages dropped under 4.5 percent in 2011 and have only recently shown hints of rising above that level,” Blitzer adds. “The unemployment rate at 4.7 percent is close to the Fed’s full employment target. Inflation adjusted per-capita personal disposable income has risen at about a 2.5 percent annual rate for 30 months.”
Blitzer adds that as the new administration in Washington seeks to spur economic growth, the “increased investment in infrastructure and changes in tax policy could affect housing and home prices.”
“Mortgage rates have increased since the election, and stronger economic growth could push them higher,” he says. “Further gains in personal income and employment may increase the demand for housing and add to price pressures when home prices are already rising about twice as fast as inflation.”