US residential property rebound gaining ground
|Thursday, 31 January 2013|
Residential property prices in 20 key US cities rose in November from a year earlier by the most in more than six years, indicating the country’s housing rebound is gaining ground.
The S&P/Case-Shiller index of property values increased 5.5% from November 2011, the biggest year on year gain since August 2006.
The S&P/Case-Shiller index is based on a three month average, which means the November data were influenced by transactions in October and September.
The October reading was revised to show a 4.2% year on year advance from a previously reported 4.3% gain and home prices adjusted for seasonal variations climbed 0.6% in November from the previous month, matching October’s increase.
The month on month gain was led by San Francisco, followed by Minneapolis. Unadjusted prices in the 20 cities fell 0.1% in November from the previous month but property values typically fall during this time of year and the year on gauge provides better indications of trends in prices.
Some 19 of the 20 cities in the index showed a year on year gain, led by a 22.8% jump in Phoenix and a 12.7% increase in San Francisco. New York was the only city to show decreases both month to month and year to year. Over the 12 month period, values in the city decreased 1.2%.
‘There are a lot of good signs but there is a long way to go before we would declare victory over this housing market,’ said Karl Case, one of the economists who created the index.
Housing is clearly recovering, according to David Blitzer, chairman of the S&P index committee. ‘These figures confirm that housing is contributing to economic growth,’ he added.
According to Stuart Miller, chief executive officer of Lennar Corp, the largest US home builder by market value, reported a long term demographic need for housing is driving the housing recovery, which is also bolstering prices.
‘As pent up demand unwinds, home builders are gaining pricing power. After years of home prices falling, in 2012 the trend turned positive, initially stabilising and then allowing for price increases across the country,’ he explained.
D.R. Horton, the largest US home builder by volume, said it has seen orders jumping 39%. ‘We experienced broad improvement in demand in most of our markets this quarter, and we significantly increased our investments in homes under construction, finished lots, land and land development to capture this increasing demand,’ said chairman Donald Horton in a statement.
Low borrowing costs are helping buyers. The average rate on a 30 year fixed mortgage was at 3.42% last week, close to the 3.31% in November that was the lowest in data going back to 1972, according to lender Freddie Mac.
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