Two new measures released Tuesday show home prices continued their upward climb earlier this year, even as sales remain lukewarm.
U.S. house prices rose 1.3 percent from January through March, according to the Federal Housing Finance Agency House Price Index. It marked the 15th straight quarter in which prices rose on the index, compiled from information about mortgages sold to or guaranteed by Fannie Mae and Freddie Mac.
“Home prices are now, on average, roughly 20 percent above where they were three years ago,” said Andrew Leventis, the principal economist for FHFA. “This run-up has been historically exceptional and is particularly notable in light of the limited household income growth and modest rate of inflation observed during that same period.
Translation: People aren’t earning much more, yet home prices are rising faster than the rate of inflation in much of the country.
The top five states in annual appreciation during the first quarter on the FHFA index were Colorado, Nevada, Florida, Washington and California.
Home prices rose by even higher percentages when measured on the S&P/Case-Shiller Home Price Indices. March sales price data was released Tuesday and showed year-over-year increases for both the closely watched 10-city and 20-city composite indices.
The index of 10 major cities rose by 4.7 percent and the index of 20 major cities rose by 5 percent over March 2014. A U.S. National Home Price Index covering all nine U.S. census divisions recorded a 0.8 gain in March and 4.1 percent over the prior March.
San Francisco and Denver saw the biggest jump in home prices on the Case-Shiller index, jumping by 10.3 percent and 10 percent respectively. Dallas prices rose 9.3 percent over March 2014.
A McClatchy article earlier this month raised concerns that some parts of the nation might be seeing housing bubbles, a concern both recognized and dismissed by David Blitzer, chairman of the Index Committee for S&P Dow Jones Indices.
“The only way you can be sure of a bubble is looking back after it’s over. The average 12 month rise in inflation adjusted home prices since 1975 is about 1.0 percent per year compared to the current 4.1 percent pace, arguing for a bubble,” he acknowledged in Tuesday’s report. “Home prices are currently rising more quickly than either per capita personal income (3.1 percent) or wages (2.2 percent), narrowing the pool of future home-buyers. All of this suggests that some future moderation in home prices gains is likely.”
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