U.S. home prices dropped 0.1% in January compared to December but were nonetheless up 4.5% compared to January 2014, according to the S&P/Case-Shiller home price index (HPI).
The report shows that home price appreciation slowed in more areas of the country in January compared to December. This was due mainly to harsh winter conditions that impacted new home construction as well as existing-home sales.
The report's 10- and 20-city composites were basically flat month over month.
Charlotte, N.C.; Miami; and San Diego, Calif., saw the biggest month-over-month increases, with each reporting an increase of about 0.7%. San Francisco saw its prices fall the most, with a month-over-month decrease of about 0.9%. Seattle and Washington D.C. reported decreases of about 0.5%.
Year over year, Denver and Miami reported the highest gains, as prices increased by 8.4% and 8.3%, respectively. Chicago saw a year-over-year increase of about 2.5%.
‘The combination of low interest rates and strong consumer confidence based on solid job growth, cheap oil and low inflation continues to support further increases in home prices,’ says David M. Blitzer, managing director and chairman of the index committee for S&P Dow Jones Indices, in a statement. ‘Regional patterns in recent months continue: strength in the West and Southwest paced by Denver and Dallas with results ahead of the national index in the California cities, the Pacific Northwest and Las Vegas. The Northeast and Midwest are mostly weaker than the national index.
‘Despite price gains, the housing market faces some difficulties,’ Blitzer adds. ‘Home prices are rising roughly twice as fast as wages, putting pressure on potential home buyers and heightening the risk that any uptick in interest rates could be a major setback. Moreover, the new home sector is weak; residential construction is still below its pre-crisis peak. Any time before 2008 that housing starts were as low as the current rate of 1 million, the economy was in a recession.’