US home prices surpass pre-recession peak amid healthy sales

US home prices surpass pre-recession peak amid healthy sales

The S&P CoreLogic Case-Shiller Indices, covering the entire nation rose 5.5% in the 12 months ended in September, up significantly from the 5.1% increase reported in August and a sign that the market is continuing to gain strength.

Home prices in the region have not rebounded as strongly throughout the housing recovery, in part because of slow job growth, said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices.

The S&P/Case-Shiller home price index for September increased by 5.1% year over year for the 20-city composite index and by 4.3% for the 10-city composite index. Just 34 of the largest 100 metropolitan areas have seen starter home prices recover to their previous peak, while 56 areas have seen high-end homes reach or surpass previous highs, according to home-tracker Trulia. Total first-time buyer (FTB) volume is up 39%, which would drive home prices higher even if buyers are no more qualified to purchase them. Yet the supply of available homes has dwindled, setting off bidding wars and pushing up home prices. Seattle led with an 11 percent increase, while prices in Portland, Ore., rose 10 percent.

But in the NY metropolitan area, single-family home prices remain about 14 percent below their peaks. Portland (up 10.9%) and Denver (up 8.7%) posted the largest year-over-year gains.

For McLaughlin, the index numbers are more ambiguous. As of the previous month's reading of the Case-Shiller index, a widely used benchmark for US housing, prices remained 0.1% below the July 2006 record.

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Some economists are surprised by the magnitude of the home-price gains in recent years, given the more moderate pace of wage growth. Sales of both existing and new homes are on the rise, along with housing starts.

Miami, Tampa, Phoenix, and Las Vegas, which experienced the biggest booms, remain well below their all-time highs, Blitzer said.

"It isn't smart to confuse this full recovery in housing prices with a full recovery in the housing market overall", said Svengja Gudell, chief economist at Zillow.

"The housing market recovery has been very uneven across the U.S. When controlling for inflation, markets that have reached their pre-recession peaks are few and nearly exclusively in the West and South".

"This was a very strong offseason compared to normal", he said.

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