Real Estate News: 2012’s home-price gain best in seven years

WASHINGTON (MarketWatch) — U.S. home prices rose in December, as 2012 saw the best calendar-year growth in seven years, according to a closely followed index released Tuesday.

The S&P/Case-Shiller 20-city composite index posted a 0.2% increase in December, following a 0.1% decline in November. After seasonal adjustment, home prices rose 0.9% in December.

“Home prices ended 2012 with solid gains,” said David Blitzer, index committee chairman at S&P Dow Jones Indices. 

Stock futures SPH3 -0.45%  held on to gains early Tuesday after the data’s release. 

Looking at longer-term trends, December’s prices were up 6.8% from the same period in the prior year, with increases in 19 of 20 cities. That’s the best calendar year gain since a 15.5% jump in 2005. 

New York was the only city with a year-over-year decrease, falling 0.5%.

“The improvement over varying parts of the country suggests that portions of the country which were previously lagging on the home price recovery front have joined in the improvement,” wrote Gennadiy Goldberg, a strategist at TD Securities. “Recovering home values will likely continue to help holders of underwater mortgages, with more homeowners becoming eligible for refinancing at lower mortgage rates. This in turn, will allow more money to be freed up for spending by consumers — a positive for the economy going forward.” 

Despite gains, prices remain about 29% below a bubble peak in 2006, according to Case-Shiller data.

Low inventories and increasing demand have supported prices over the past year. While the housing market remains far below peak levels, home construction, sales and confidence among builders have all been trending higher, according to recent data reports. 

Still, looking forward, price growth may slow down, Blitzer said. 

“Housing is on the upswing; some of the strongest numbers may have already been seen,” Blitzer said.

He cited other recent housing data that show moderating growth. For example, a recent report on confidence among home builders showed large gains from the prior year, but a monthly decline due to lighter prospective-buyer traffic and lower sales of single-family homes. Read more about builder confidence.

 

Elsewhere Tuesday, the Federal Housing Finance Agency reported that its own gauge of home prices showed growth of a seasonally adjusted 0.6% in December, and an annual gain of 5.5%. Read more about FHFA’s home-price gauge.

 

Another provider, CoreLogic, said prices were 8.3% stronger in 2012. These indexes vary slightly in composition and methodology. Read St. Louis Fed article explaining differences.

 

The U.S. Department of Commerce reported Tuesday that sales of new U.S. homes rose almost 16% in January. Read more about new-home sales.

 

Ruth Mantell is a MarketWatch reporter based in Washington. Follow her on Twitter @RuthMantell.

Courtesy of Wall Street Journal:  http://www.marketwatch.com/story/annual-home-price-gain-best-in-seven-years-2013-02-26