US home price gains outpace forecasts in December
Home price gains in the States accelerated to a 30-month high in December, according to one of the most widely-followed gauges.
The Standard&Poor's CoreLogic Case-Shiller national home price index increased by 0.9% month-on-month in December, pushing the year-on-year rate of price gains from 5.6% in November to 5.8% for December.
A lack of supply or low inventories were one factor behind the price gains, according to David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.
Another factor, according to S&P were 20-year mortgage rates, which were then standing at 4.2%, against an average level of 6.4% since 1990.
Seasonally adjusted, S&P's home price index for the country's 20 largest cities rose by 0.9% (consensus: 0.7%). Versus a year ago prices were up by 5.6% (consensus: 5.3%).
House price inflation rising well above average historical rate
In inflation adjusted terms, house price gains were running at 3.8%, versus an average clip of 1.3% since 1975.
Nevertheless, the speed of increases was not alarming, Blitzer said.
"About two-thirds of the time, the rate is between -4% and +7%. Home prices are rising, but the speed is not alarming," Blitzer explained.
Blitzer added that: "Another indicator that home price levels are normal can be seen in the charts of Seattle and Portland OR. In the boom-bust of 2005-2009, prices of low, medium, and high-tier homes moved together, while in other periods, including now, the tiers experienced different patterns."
For his part, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "Details aside, the key point here is that very low inventory is pushing home prices up quite quickly, so implied real mortgage rates are negative. Usually, that means we should expect housing market activity to pick up, but tight mortgage lending criteria are crimping demand.
"Average FICO scores for successful loan applicants have dipped in recent months, though, suggesting that lenders are now being a bit less aggressive. Still, we aren't expecting a sustained surge in home sales anytime soon, but prices will keep rising."