U.S. home prices soared to new levels in May, rising 12.2 percent compared with May 2012 and rising 2.4 percent over April’s numbers, according to the latest monthly report of the S&P/Case-Shiller Home Price Index.
Dallas and Denver, two of the 20 large cities tracked by the index, reached record home-price levels, surpassing their pre-financial crisis peaks set in June 2007 and August 2006. This is the first time any city has made a new all-time high since the housing crisis began in 2008.
The 20-city composite annual returns rose slightly from April to May as it posted the best year-over-year gains since March 2006. All 20 cities increased from May 2012 to May 2013 and from April 2013 to May 2013.
"Home prices continue to strengthen," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement. "Two cities set new highs, surpassing their pre-crisis levels, and five cities – Atlanta, Chicago, San Diego, San Francisco and Seattle – posted monthly gains of over three percent, also a first time event.
As of May 2013, average home prices across the United States are back to their spring 2004 levels. Measured from their June/July 2006 peaks, the peak-to-current decline is approximately 24 to 25 percent. The recovery from the March 2012 lows is 16.5 percent for the 20-city index.
On an annual basis, all cities showed gains ranging from 3.3 percent to 24.5 percent. Boston home prices were up 7.5 percent over May 2012 according to the index, the fifth-lowest increase among the 20 cities.
Twelve cities – Atlanta, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, Phoenix, Portland, San Diego, San Francisco, Seattle and Tampa – posted double-digit growth. Atlanta, Las Vegas, Phoenix and San Francisco all posted annual increases of over 20 percent.
Some economists sounded a note of caution about the strong recent price gains.
"Three straight months of national home value appreciation above 10 percent is not normal, not sustainable and, frankly, not very believable," Svenja Gudell, senior economist for real estate portal Zillow, said in a statement. Gudell believes the recent price rises are being artificially boosted because many formerly distressed properties are now returning to the market as normal sales.
"It’s increasingly critical that the average American homeowner not read numbers like today’s Case-Shiller results and assume their homes must also have appreciated at these levels over the past year, or will continue to appreciate at these levels going forward. In reality, typical home values have appreciated at roughly half this pace for the past several months, which is still very robust," she said in a statement.
