Thursday, January 30, 2014

Case-Shiller: Growth in home price index in metro Denver begins to slow

Case-Shiller released its home price index for November 2013 this week. The home price index for metro Denver increased 8.8 percent, year over year, which was the smallest year-over-year increase for any month since December 2012.

The first graph shows the year-over-year change in the index for each month since 2006. We can see that although November's change was down compared to recent months, it nonetheless continues a trend in sizable increases in the home price index for metro Denver. We must go back to late 2001 to find similar growth rates. In that case, index growth was weakening as the region headed into the 2002 recession in Colorado.

The second graph shows the year-over-year growth rates for each month for both metro Denver and the 20-city composite index. In this case, we see that the growth rate has continued to climb for the 20-city  index while it has flattened and fallen in recent months in the metro Denver area. The metro Denver index has shown positive growth year-over-year for the past 23 months. For much of 2010 and 2011, the metro Denver growth exceeded that of the 20-city index. 

Recent growth in the 20-city index, is driven by large growth rates in San FRancisco, Las Vegas, and a few other cities. According to the Case-Shiller press release:

“November was a good month for home prices,” says David M. Blitzer, Chairman of the Index  Committee at S&P Dow Jones Indices. “Despite the slight decline, the 10-City and 20-City
Composites showed their best November performance since 2005. Prices typically weaken as we  move closer to the winter. Las Vegas, Los Angeles and Phoenix stand out as they have posted 20 or  more consecutive monthly gains.
The index itself is near all-time highs in November, and has fallen off the September 2013 peak only slightly over the following two months. The next graph shows that the index is now above the old 2006-2007 peak levels, and is well above the recent lows in 2011 and 2012.