Home Prices Rose 13.6% Year-Over-Year in October, Fastest Since '06 (Update 1)
Updated from 9:28 a.m. ET with additional information.
NEW YORK (TheStreet) -- Home prices rose 13.6% year-over-year in October, just shy of expectations, but still the fastest pace since February 2006.
The widely followed S&P Case-Shiller 20-City Composite Index rose 1% in October from September, on a seasonally adjusted basis, in line with consensus estimates available on Bloomberg.
Unadjusted for seasonality, prices were up 0.2%, against expectations for a 0.1% drop.
Year-over-year the index was forecast to rise 13.7% in October.The Case-Shiller Index is based on a three-month moving average, so the latest report reflects price trends for the months of August, September and October. It is also based on closed transactions, which means contracts to buy homes were signed a couple of months earlier.
Home prices have posted an annual increase for 17 consecutive months, but the pace of gains in recent months has slowed. Eighteen out of the 20 cities tracked by the index posted a monthly slowdown. San Francisco, where prices have shot up 25% over the past year on back of the boom in Silicon Valley, posted its first monthly decline in 19 months. Denver and Dallas are slightly off their peak reached last month. Phoenix continued its winning streak, however, with its 25th consecutive monthly increase. Las Vegas posted the biggest monthly increase of 1.2%. "Home prices increased again in October," David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices said in a press release. "Both Composites' annual returns have been in double-digit territory since March 2013 and increasing; now up 13.6% in the year ending in October. However, monthly numbers show we are living on borrowed time and the boom is fading." The 20-City and 10-City Composite Indices have posted strong double-digit annual gains since March. The indices are about 20% below their June/July 2006 peaks. The recovery from the March 2012 lows is 23.1% and 23.7% for the 10-City and 20-City Composites. Home prices are expected to slow to single-digit gains in 2014, with interest rates poised to climb further as the Federal Reserve tapers its purchase of Treasury bonds and mortgage-backed securities. Higher mortgage rates and tough credit conditions are expected to make it harder for first-time home buyers to buy a home. On the flip side, higher home prices may help increase the supply of homes available for sale as homebuilders ramp up construction and more homeowners list their homes. That could make it easier for a potential buyer in the market to find a home. -- Written by Shanthi Bharatwaj in New York Follow @shavenk
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