The S&P/Case Shiller Home Price Index scored its greatest year over year gain in over seven years in October the company said today.  Both the 10-City and the 20-City Composites were up 13.6 percent compared to October 2012, the 17^th straight month the two composites had increased compared to the same month the previous year.  It was the largest annual gain since February 2006.

On a monthly basis the two Composites gained 0.2 percent.  The company's report said that "Eighteen of the 20 metropolitan areas tracked by the survey posted lower monthly rates in October than in September.  After 19 months of gains San Francisco posted a slightly negative return."  Phoenix posted its 25^th consecutive increase in October. 

David M. Blitzer, Chairman of S&P's Dow Jones Index Committee said that while each index continued to show double-digit annual returns, "Monthly numbers show we are living on borrowed time and the boom is fading."

He said that, despite those double-digit returns for both Composites and thirteen of the cities therein, "Cities at the top of the range (Las Vegas, San Diego and San Francisco) saw smaller annual increases.  On the other hand, cities that have been relatively underperforming (Cleveland, New York and Washington) saw their annual gains grow.  Miami showed the most improvement.  Chicago recorded its highest annual rate (+10.9 percent) since December 1988.  Charlotte and Dallas posted annual increases of 8.8 percent and 9.7 percent, their highest since the inception of their indices in 1987 and 2000."

Blitzer said that the key question facing housing is the direction the Federal Reserve will take in scaling back quantitative easing and how this will affect mortgage rates.  "Other housing data paint a mixed picture suggesting that we may be close to the peak gains in prices.  However, other economic data point to somewhat faster growth in the new year.  Most forecasts for home prices point to single digit growth in 2014."

Home prices for both the 10- and 20-City indices have recovered to mid-2004 levels.  The two Composites peaked in the summer of 2006 and are now down about 20 percent from those peaks, more than half-way back from the post-recession lows established in March 2012.  The 10-City has gained 23.1 percent and the 20-City 23.7 percent since hitting those troughs.

Ten cities posted positive monthly returns in October, with Las Vegas and Miami having the greatest gains at 1.2 percent and 1.1 percent respectively.  Nine cities declined month over month (Atlanta, Boston, Chicago, Cleveland, Dallas, Denver, San Francisco, Seattle, and Washington).  Charlotte and Miami were the only two with larger gains from September to October than from August September while New York remained flat. 

All 20 cities had positive annual growth and thirteen had higher October numbers than September.  Miami had the biggest jump, from an annual rate of 14.3 percent in September to 15.8 percent in October.  Las Vegas, Los Angeles, and San Francisco continued to post annual gains over 20 percent.

The S&P/Case-Shiller Home Price Indices track the price path of typical single-family homes in each metropolitan area covered. The indices have a base value of 100 in January 2000 so a current value of 150 indicates prices in that market have increased by 50 percent since January 2000.  Detroit at present is the only city that is below that base with an index value of 94.79.