By: Mark Lieberman, Five Star Institute Economist 03/26/2013
Home prices posted their strongest year-over-year gain in almost seven years in January, according to the Case-Shiller 10- and 20-city Home Price Indices released Tuesday. Home prices rose year-over-year in all 20 of the cities in the Case-Shiller survey.
Month-over-month, the 10-city index improved 0.2 percent in January, while the 20-city index was up 0.1 percent. Year-over-year, the 10-city index was up 7.3 percent, and the 20-city index rose 8.1 percent.
Economists had forecast the month-over-month gain in the 20-city index would be 0.1 percent and the year-over-year gain would be 8.2 percent.
Prices rose in nine cities in January over December while falling in eight. Prices were unchanged in the remaining three. December data were revised showing prices rose month-over-month in 10 cities compared with nine in the original report.
The 10-city index rose to 158.72, its highest level since October 2010, while the 20-city index improved to 146.14, its highest level since September 2010.
The report showed a steady improvement in prices in the West. Prices have increased in Phoenix for 16 straight months, in Los Angeles and San Francisco for 11 straight months, in Denver for 11 of the last 12 months, and in Las Vegas for 10 straight months.
By contrast, prices in cities in other regions have been more erratic: down for the last five months in Washington D.C. and Cleveland after improving for six straight months, down in Chicago for the last five months after improving for the previous five months, and down in Boston for four of the last five months.
The year-over-year price gains were led by Phoenix, where prices rose 23.2 percent, consistent with a sharp drop in that city’s unemployment rate, which fell to 7.3 percent from 8.3 percent in the same period.
Prices rose 17.5 percent year-over-year in San Francisco, which saw its unemployment rate tumble to 6.8 percent from 8.1 percent. In Las Vegas, where the unemployment rate fell to 10.4 percent from 13.3 percent in the last year, prices rose 15.3 percent.
Price rose 13.8 percent in Detroit despite an increase in the unemployment rate from 18.8 percent to 19.8 percent.
Three other cities saw double-digit percent gains in prices in the last year: Atlanta (+13.4 percent), Los Angeles and Minneapolis (+12.1 percent each). In Atlanta, the unemployment rate fell to 11.2 percent from 11.7 percent in the last year; in Los Angeles, the unemployment rate dropped to 12.1 percent from 13.3 percent from January 2012 to January 2013; and in Minneapolis, the unemployment rate increased to 5.8 percent from 5.5 percent in the last year.
Month-over-month price gains were led by Las Vegas (+1.6 percent), Phoenix (+1.1 percent), and Atlanta (+1.0 percent). Prices rose by less than 1.0 percent in January in Charlotte, Los Angeles, Miami, New York, San Francisco, and Tampa.
Prices fell 0.9 percent in January in Chicago and Detroit and 0.7 percent in Washington D.C. Prices fell by less than 0.6 percent in January in Cleveland, Minneapolis, Portland, and Seattle.
Prices were unchanged in January in Boston, Dallas, and Denver.
The 10-city index, at 158.72, is down 29.9 percent from its June 2006 high of 226.29 and the 20-city index, at 146.14, is off 29.2 percent from its July 2006 peak of 206.52.