The Standard & Poor’s Case Shiller Housing Index released on Tuesday, August 20, 2012 continued its five month march of improvement in the housing market. The index is the leading measure of United States home prices. According to the report, home prices increased by 0.9 percent in August compared to July 2012. The only exception to the gains posted in both the 10 and 20 city index was Seattle where home prices declined by 0.1 percent.
In August 2012 the 10 city composite recorded an annual increase of 1.3 percent while the 20 city index recorded an annual gain of 2.0 percent.
David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices said:
“Home prices continued climbing across the country in August. Nineteen of the 20 cities and both Composites showed monthly gains in August. Seventeen cities and both Composites posted positive annual returns in August 2012. In 18 cities and both Composites annual rates improved in August versus July. Dallas’ rate remained unchanged at +3.6% and Chicago worsened slightly from a -1.0% annual rate in July to a -1.6% annual rate in August.” Blitzer continued: “The sustained good news in home prices over the past five months makes us optimistic for continued recovery in the housing market.”
In August 2012 the average price of a home throughout the United States returned to their summer/fall 2003 levels for both the 10 and 20 city indices. Compared to the June/July 2006 peaks the fall in both Composites is roughly 30 percent but nearly 8.5 percent up from their recent lows recorded in early 2012.
This was the largest increase in two years and economists say it is a sign that housing will continue to help grow the United States’ fragile recovery.
As the Case-Shiller index is calculated on a three month average, transaction in June and July influenced the August report.
The Case-Shiller report is only one of many measures of the health of the US housing market that has shown improvement in recent monthly reports. Both existing and new home sales have risen, home inventory have fallen and builders have increased housing starts.
The anemic but continued improvement in the national economy has also helped the housing market along with historic low mortgage rates which have remained less than 3.7 percent for five months. These factors along with home values about 35 percent less than their highs make home buying very affordable.