Economy Watch: More Evidence of Higher Home Prices
- Aug 07, 2013
Case-Shiller’s most recent numbers last week pointed to sustained growth in U.S. home valuations, though the report was for the three months ending in May. On Tuesday, CoreLogic issued its most recent report on home valuations, and while the methodology is somewhat different, the numbers point to a similar conclusion. They’re also newer, since CoreLogic’s report is for June.
Home prices nationwide, including distressed sales, increased 11.9 percent year-over-year in June 2013, CoreLogic reports. That’s the 16th consecutive monthly increase in home prices nationally. Month-over-month, including distressed sales, home prices were up by 1.9 percent in June. Take distressed sales out of the picture—short sales and REOs—and the increase was only slightly less: home prices were up year-over-year by 11 percent in June, and month-over-month by 1.8 percent.
“In the first six months of 2013, the U.S. housing market appreciated a remarkable 10 percent,” Mark Fleming, chief economist for CoreLogic, noted in a press statement. “This trend in home price gains is moving at the fastest pace since 1977.”
But maybe not too much higher
Does this upward trajectory of home prices mean a bubble is in the works? Another compiler of housing data, Trulia, also released a report on Tuesday, and it casts doubt on the notion of a 2000s-like housing bubble. According to Trulia, asking home prices are now starting to lose steam.
Nationally, the company says, asking prices for homes dropped 0.3 percent in July–the first month-over-month decline since November 2012. Asking prices rose 3.3 percent quarter-over quarter, down from a peak of 4.2 percent in April. Year-over-year, asking prices are up 11 percent nationally, but Trulia asserts that an annual figure is slower to show changes than monthly or quarterly numbers.
“If you were worried about a housing bubble, July’s asking-price slowdown will probably be the best news you’ve heard this year,” Trulia’s chief economist Jed Kolko said in a press statement. “The asking home price slowdown in July could be the start of the return to normal price gains. The blazing fast price increases we’ve seen in recent months could not last, especially with rising mortgage rates, expanding inventory and declining investor interest.”
GSEs to go away? Not yet
President Obama outlined plans for “winding down” Fannie Mae and Freddie Mae in a speech in Phoenix on Tuesday. Under his plan—which looks like a Senate bill now taking shape in that chamber—the GSEs would continue to reduce their portfolios, and would lose the (formally unstated, but always understood) guarantee of a federal government bailout. Going forward, private investors would shoulder most of the risk, with the government as a secondary guarantor.
A rather different bill is forming in the House, one that might call for the complete extrication of the federal government from the housing market. Considering the state of Congress, it’s unlikely that either version will be passed before the 2014 election.
Wall Street took a dive on Tuesday, with the Dow Jones Industrial Average off 93.39 points, or 0.6 percent. The S&P 500 lost 0.57 percent and the Nasdaq declined 0.74 percent.