The S&P Case-Shiller index recorded the largest gain in home prices since 2006, rising 8.1 percent last month. The index records home prices across twenty U.S. cities, all of which posted gains over the last twelve months. All but Detroit show home prices rising at accelerating rates, according to the S&P Dow Jones press statement.
“This marks the highest increase since the housing market bubble burst,” said David Blitzer, Chairman of the Index Committee at S&P Dow Jones. After more than two years of consecutive year-over-year declines, New York reversed the trend and posted a positive return in January. Phoenix, Las Vegas, and San Francisco - some of the hardest hit markets in the housing crash - posted the highest gains in home prices, according to the index. Atlanta and Dallas also recorded their highest year-over-year gains.
The growth in home prices is further evidence of an economic recovery. Other factors contributing to the health of the housing market include increases in single-family building permits and housing starts; lower overall foreclosure numbers; improved employment conditions; and record low mortgage rates.
A separate report from the government showed the rate of new home sales during February to be slightly down from January by 5 percent, but up from last year by 12 percent. Experts say inclement weather during February, specifically the nor’easter storm called Nemo, may have contributed to lower sales numbers compared to January.
Given the year-over-year increase in February, new home sales are one of the strongest indicators of the 2013 housing recovery. Demand for new homes has outpaced current inventory, driving up the average price.
However, home prices are still below their peak at the height of the housing bubble in August 2006. Another factor that could hold back the housing market are the 10.4 million homes considered “underwater,” or owing more on the mortgage than the home is worth, according to CoreLogic. Fortunately, the tide is turning for underwater homeowners. By the last quarter of 2012, nearly 200,000 homes had returned to positive equity.
Home industry analysts are looking forward to the spring selling season. TIME reporter Alison Rogers commented that data is bolstering claims that a housing recovery is well underway. “When charted,” Rogers writes, “the data looks like it’s been hit with a booster rocket, with the past three months’ reports showing solid year-over-year gains of 5.5%, 6.8%, and the just-reported 8.1%.”
Home Prices Surging according to Case-Shiller index.