Wednesday, October 30, 2013

Case-Shiller: August home price index grows by largest amount since August 2001

Case-Shiller released its home price index for August 2013 this week. The home price index for the Denver area rose 0.9 percent percent from July to August, and rose 10.1  percent, year over year, from August 2012 to August 2013. This is the highest year-over-year increase since August 2001 when the growth rate hit 10.7 percent. The year-over-year increase in August was the twentieth year-over-year increase in a row for Denver. August also marks a third month above previous-peak levels for the metro Denver index. The index peaked in July 2006 at 140.3, and the index value during August 2013 was 146.95. The first graph shows the recent increase to new peak levels:

 According to S and P's press release, home prices nationwide continued to show some signs of growth:
““The 10-City and 20-City Composites posted a 12.8% annual growth rate,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Both Composites showed their highest annual increases since February 2006. All 20 cities reported positive year-over-year returns. Thirteen cities posted double-digit annual gains. Las Vegas and California continue to impress with year-over-year increases of over 20%. Denver and Phoenix posted 20 consecutive annual increases; Miami and Minneapolis 19. Despite showing 26 consecutive annual gains, Detroit remains the only city below its January 2000 index level."

In year-over-year comparisons for August, all of the twenty cities measured reported increases.  The largest increases were in Las Vegas and San Francisco with year over year increases of 29.2 percent and 25.4 percent, respectively.

The first chart shows trends in the Case-Shiller index for the Denver area and for the 20-city composite index. It is clear that Denver did not experience the kind of price bubble that occurred in many other metropolitan areas, and consequently, the index has not fallen nearly as far in Denver compared to the larger composite. The metro Denver index value is at the highest value seen since 2006.

The 20-city composite is down 20 percent since it peaked in July 2006, but the Denver index is up 4.7 percent from its August 2006 peak.

The second chart compares year-over-year changes in the Denver area index and in the 20-city composite. Overall, the index has been less volatile in Denver than has been the case for the 20-city composite. The year-over-year change in the 20-city composite during December was positive for the fifteenth month in a row.

After many months of higher growth rates in Denver than in the 20-city index, the Denver index was surpassed in March 2013 as the 20-city index YOY growth rate rose to 10.9 percent. The composite index growth rate has now outpaced the Denver metro rate for six months. To find a larger year-over-year growth rate in metro Denver, we'd have to look all the way to 2001, during the dot-com boom.