The S&P Case-Shiller National home
price index and the Federal Housing Finance Agency's Home Price Index (HPI),
both issued on Tuesday, diverged sharply on the direction of home prices during
the fourth quarter of 2013. The FHFA HPI
shows an increase of 1.2 percent compared to the third quarter while
Case-Shiller's National number moved in the opposite direction.
The Case-Shiller index of National home
prices, a quarterly index which covers all nine U.S. census divisions, rose
11.3 percent from the fourth quarter of 2012, a slight improvement over the
11.2 percent annual increase in the third quarter of 2013. However the fourth quarter index was down 0.3
percent from that third quarter level.
The Case-Shiller 10- and 20-City
Composite Indices were flat in December with the 10-City unchanged and the
20-City posting its second small monthly decline of 0.1 percent. The two indices still posted healthy annual
gains of 13.6 percent and 13.4 percent respectively although these increases
were about 30 basis points below the annual gains reported in November.
David M. Blitzer, Chairman of the Index Committee
at S&P Dow Jones said this was the best year for the index since 2005. "However, gains are slowing from
month-to-month and the strongest part of the recovery in home values may be over. Year-over-year values for the two monthly
Composites weakened and the quarterly National Index barely improved. The seasonally adjusted data also exhibits
some softness and loss of momentum."
Despite the flat composite results a few
cities still pulled out month-over-month increases especially Miami which shot
up 0.9 percent. Las Vegas rose 0.4
percent and Tampa 0.3 percent. Los
Angeles, San Francisco, and Washington all posted gains of 0.2 percent. The largest monthly declines were in Cleveland
(-1.2 percent), Minneapolis (-0.7 percent), Chicago (-0.5 percent), and Phoenix
and New York (-0.3 percent).
Thirteen of the 20 cities in the
composite indices had double digit annual appreciation led by Las Vegas at 25.5
percent and San Francisco at 22.6 percent.
Prices rose 20.3 percent in Los Angles and 18 percent in Atlanta and San
Diego. The smallest annual increases
among the 20 cities were in Cleveland (4.5 percent), New York (6.3 percent) and
Charlotte (7.8 percent)
"Recent economic reports suggest a
bleaker picture for housing, "Blitzer said.
"Existing home sales fell 5.1 percent in January from December to the
slowest pace in over a year. Permits for
new residential construction and housing starts were both down and below expectations. Some of the weakness reflects the cold weather
in much of the country. However higher
home prices and mortgage rates are taking a toll on affordability."
Case-Shiller says that home prices are
back to spring 2004 levels and measured from their June/July 2006 peaks the two
composites are still down about 20 percent.
Their recovery from March 2012 lows is 23-24 percent.
The 1.2 percent quarterly increase in
its HPI reported by FHFA was the tenth consecutive quarterly increase. Principal Economist Andrew Leventis said, "Home
price appreciation in the fourth quarter was considerable, but more modest than
in recent periods. It is too early to
know whether the lower quarterly growth rate represents the beginning of more
normalized price appreciation patterns or a more significant slowdown."
The seasonally adjusted, purchase only
HPI rose 7.7 percent from the fourth quarter of 2012 to the fourth quarter of
2013. The cost of other goods and
services were up only 0.7 percent over the same period, therefore inflation adjusted
home prices were up 7.0 percent. Prices
in December rose 0.8 percent compared to November.
FHFA's expanded-data price index, a measure
that adds transaction information from county recorders and the Federal Housing
Administration to the FHFA information, rose 1.2 percent from the previous
quarter as well and was up 7.8 percent from the 4th quarter of 2012.
The seasonally adjusted, purchase-only
HPI rose in 38 states in the fourth quarter, down from 48 states in the third
quarter. Nevada, California, Arizona,
Oregon, and Florida posted the largest annual gains.
Two of the nine census regions, New England,
and the Middle Atlantic, had monthly decreases (-0.5 and -0.6 respectively) in
their HPI. The largest increase was in
the West South Central region which was up 2.0 percent, and the East South
Central, up 1.6 percent. All nine
regions posted increases on an annual basis with the smallest rise in the
Middle Atlantic at 2.1 percent followed by New England at 2.7 percent. The largest jumps in the HPI were in the
Pacific and Mountain Regions at 14.9 percent and 12.6 percent respectively.
The S&P Case Shiller indices combine
matched price pairs for thousands of individual arms-length sales transactions
with a value-weighted average of the cities in each index. The composites have a base value of 100 in
January 2000, thus a current index value of 150 translates to a 50 percent
appreciation rate since that date for a typical home in the subject
market. As of December only Detroit
remains below the base with an index of 93.63.
The FHFA HPI is based on data for more than 6 million repeat sales
transactions financed with Fannie Mae or Freddie Mac mortgages.