Both the S&P
CoreLogic Case-Shiller and The Federal Housing Finance Agency (FHFA) report
that the country ended the year with more than a 10 percent annual increase in
home prices.
The Case-Shiller U.S. National Home Price Index, which covers all
nine U.S. census divisions, showed a year-over-year gain of 10.4 percent in December
while FHFA put the increase at 11.4 percent.

The Case-Shiller National
index showed significant acceleration in appreciation from the 9.5 percent reflected in its November report for the prior 12
months. The 10-City and 20-City appreciation was also faster than in November
at 9.8 percent and 10.1 percent compared to 8.9 percent and 9.2 percent,
respectively.

Phoenix, Seattle, and San Diego again
had the greatest growth among the cities tracked. Phoenix led the way for the
19th month with a 14.4 percent year-over-year price increase,
followed by Seattle, up 13.6 percent increase and San Diego with a 13.0 percent
gain. Detroit continues to have insufficient transaction data available due to
residual problems from earlier pandemic related office closures so only 19
cities are included in the indices. Eighteen of the 19 reported higher price
increases in the year ending December 2020 versus the year ending November
2020.  

The
National Index was up 0.9 percent
on a non-seasonally adjusted (NSA) basis from
November while the 10-City Composite rose 0.9 percent and 20-City Composite 0.8
percent. After seasonal adjustment (SA) the National Index had a
month-over-month increase of 1.3 percent, while the 10-City and 20-City Composites
were up 1.2 percent and 1.3 percent. Eighteen cities reported increases before
seasonal adjustment, while all 19 cities did so afterward.

 

 

Selma Hepp, CoreLogic Deputy
Chief Economist provided the following comment regarding the December results. “With a
full year of data, S&P CoreLogic Case-Shiller Index once again proved that
2020 was an unprecedented year
in many ways, especially for the housing market.
In December, the index surged at 10.4 percent – the first double-digit increase
since January 2014.
The month-to-month index also increased 0.85 percent,
making it the strongest November- to-December increase since the data series
began. The momentum in buyer demand that picked up speed during the second half
of the year propelled through the end of the year, and seemingly into 2021. But
acceleration in price growth is largely driven by record-low mortgage rates and
the severe undersupply of for-sale home – two factors that may take a turn this
year and relieve some of the price pressure. But demand from millennials and
existing owners, who may have been on the sidelines throughout the pandemic, is
likely to persist.”

Craig J. Lazzara, Managing Director and Global Head of
Index Investment Strategy at S&P DJI said, “The trend of accelerating
prices that began in June 2020 has now reached its seventh month and is also
reflected in the 10- and 20-City Composites (up 9.8 percent and 10.1 percent,
respectively).

“As COVID-related
restrictions began to grip the economy in early 2020, their effect on housing
prices was unclear. Price growth decelerated in May and June, and then began a
steady climb upward, and   December’s
report continues that acceleration in an emphatic manner. 2020’s 10.4 percent
gain marks the best performance of housing prices in a calendar year since
2013. From the perspective of more than 30 years of S&P CoreLogic
Case-Shiller data, December’s year-over-year change ranks within the top decile
of all reports.

“These data are
consistent with the view that COVID has encouraged potential buyers to move
from urban apartments to suburban homes. This may indicate a secular shift in
housing demand or may simply represent an acceleration of moves that would have
taken place over the next several years anyway. Future data will be required to
address that question.”

The S&P CoreLogic
Case-Shiller Home Price Indices are constructed to accurately track the price
path of typical single-family home pairs for thousands of individual houses
from the available universe of arms-length sales data. The National U.S. Home
Price Index tracks the value of single-family housing within the United States.
The indices have a base value of 100 in January 2000; thus, for example, a
current index value of 150 translates to a 50 percent appreciation rate since
January 2000 for a typical home located within the subject market.

As of December 2020, the
National Index was at 234.40 compared to 232.38 in November. The 10- and
20-City Composites had readings of  254.18
and 240.75  up from to 251.65 and 238.48
the prior month. Los Angeles has the highest index reading at 317.64  and Cleveland (absent data on Detroit) the
lowest at 141.25.                    

The 11.4 percent price
growth reported by FHFA was 0.04 point higher than the annual increase in
November.  The report also showed that
the increase in the fourth quarter of 2020 was up 10.8 percent compared to the fourth
quarter of 2019. Appreciation from the 3rd quarter to the 4th was 3.8 percent.
FHFA said house prices have risen for 38 consecutive quarters, or since
September 2011. The SA monthly index for the month was 1.1 percent higher than
in November.

“House prices nationwide
recorded the largest annual and quarterly increase in the history of the FHFA
HPI
,” said Dr. Lynn Fisher, Deputy Director of FHFA’s Division of Research
and Statistics. “Low mortgage rates, pent up demand from homebuyers, and a
limited housing supply propelled every region of the country to experience
faster growth in 2020 compared to a year ago despite the pandemic. In
particular, house prices in western states and cities saw the highest rates of
growth, where annual gains often rose above 10 percent.”

House prices rose in all 50 states and the District of
Columbia between the fourth quarters of 2019 and 2020.  The top five areas
in annual appreciation were Idaho at 21.1 percent; Montana 15.5 percent; Utah 15.4
percent; Arizona 14.1 percent; and Connecticut 14.1 percent.  Idaho has
been the leading state for the last 9 quarters.  Even at the lower end the
gains were unusual. Louisiana  was up 5.9
percent; Hawaii 6.1 percent; North Dakota 6.7 percent; and Illinois 7.7
percent. Only in the District of Columbia was appreciation unexceptional, up only
1.5 percent.  

Among the nine census divisions, the Mountain division again
had the strongest growth, 13.3 percent from Q4 2019 to the same quarter in 2020
and a 4.6 percent increase quarter-over-quarter. That division has led the
nation for 13 consecutive quarters. Annual appreciation was weakest in the West
South Central division, where prices rose by 8.6 percent between the fourth
quarters of 2019 and 2020.

 

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FHFA’s House Price Index is based on the sales prices of
homes financed by the GSEs Fannie Mae and Freddie Mac. The index was
benchmarked at 100 in January 1991. The index value in December was 313.5.

By Jann Swanson , dated 2021-02-23 11:25:38

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Courtesy of Mortgage News Daily

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