A widely tracked index of U.S. home prices has hit a new high, surpassing a previous peak set in July 2006 — well before the all-out housing crisis of 2007-2009.
The national index from S&P CoreLogic Case-Shiller, which covers all nine U.S. census divisions, reported a 5.5 percent annual gain in September, up from 5.1 percent the previous month. The 10-City composite posted a 4.3 percent annual increase, up from 4.2 percent the previous month. The 20-City Composite reported a year-over-year gain of 5.1 percent, unchanged from August.
Seattle, Portland, and Denver reported the highest year-over-year gains among the 20 cities over each of the last eight months.
It’s not all positive, however, looking ahead. These prices were measured before mortgage interest rates surged after the presidential election in November. The average rate on the 30-year fixed loan had been at about 3.5 percent for several months but then jumped well over 4 percent following the election. It is now around 4.25 percent.
Nonetheless, tight supplies and high demand is still shaping the direction of the housing market, with higher interest rates a looming factor.
“The new peak set by the S&P Case-Shiller CoreLogic National Index will be seen as marking a shift from the housing recovery to the hoped-for start of a new advance” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “While seven of the 20 cities previously reached new post-recession peaks, those that experienced the biggest booms — Miami, Tampa, Phoenix and Las Vegas — remain well below their all-time highs. Other housing indicators are also giving positive signals: sales of existing and new homes are rising and housing starts at an annual rate of 1.3 million units are at a post-recession peak.”
Obviously, it’s been a seller’s market for a long time in many communities across the U.S. But the outlook calls for a gradual shift toward buyers, according to Zillow.
“A large majority (72 percent) of experts surveyed in the most recent Zillow Home Price Expectations Survey said the pendulum was likely to swing back into buyers’ favor in 2017, 2018 or 2019,” writes Svenja Gudell for Zillow.
Of those experts who responded, 17 percent said the market dominance would shift to buyers in 2017, 43 percent said the shift would occur in 2018 and 12 percent said it would happen in 2019.