Home prices climb higher in May

5.6% in­crease marks sixth straight month in­dex has gained

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - CHRISTO­PHER S. RUGABER

WASH­ING­TON — U.S. home prices reached a new high in May for the sixth straight month.

The Stan­dard & Poor’s CoreLogic na­tional home price in­dex, re­leased Tues­day, in­creased 5.6 per­cent in May, the lat­est data avail­able. It is now 3.2 per­cent higher than its July 2006 peak.

While the tra­jec­tory of price in­creases in the 20 cities mea­sured by the in­dex has some an­a­lysts fear­ful of an­other hous­ing bub­ble, oth­ers down­play the no­tion, and the un­re­lent­ing price in­creases may al­ready be cool­ing sales. Other as­pects of last decade’s hous­ing boom and bust, such as rapid sales in­creases and surg­ing home­build­ing, aren’t hap­pen­ing now.

“Price in­creases vary across the coun­try, un­like the ear­lier pe­riod when ris­ing prices were al­most uni­ver­sal,” David Bl­itzer, chair­man of the In­dex Com­mit­tee at Stan­dard & Poor’s, said. “The small sup­ply of homes for sale, at only about four months’ worth, is one cause of ris­ing prices. New home con­struc­tion, higher than dur­ing the re­ces­sion but still low, is an­other fac­tor in ris­ing prices.”

A sep­a­rate price in­dex main­tained by the Na­tional As­so­ci­a­tion of Re­al­tors is also ris­ing steadily, though it re­mains about 9 per­cent be­low its 2006 peak. The Stan­dard & Poor’s CoreLogic in­dex tracks the same houses over time and is gen­er­ally con­sid­ered a bet­ter gauge of price changes, while the Na­tional As­so­ci­a­tion of Re­al­tors’s mea­sure is af­fected by the pro­por­tion of higher-priced or lower-priced homes on the mar­ket.

Much of the price gain is be­ing driven by Seat­tle; Port­land, Ore.; and San Fran­cisco. All three cities have strong pop­u­la­tion growth and more rental prop­er­ties than other U.S. cities, Stan­dard & Poor’s said.

In San Fran­cisco, just 36 per­cent of homes are owne­roc­cu­pied, while in Seat­tle the fig­ure is 46 per­cent and in Port­land, 52 per­cent. All are be­low the na­tional av­er­age of 64 per­cent.

From 2010 through 2016, the U. S. pop­u­la­tion has grown 4.7 per­cent, Stan­dard & Poor’s says. In San Fran­cisco it has grown 8.2 per­cent, in Port­land by 9.6 per­cent and Seat­tle, 15.7 per­cent.

Na­tion­wide, the num­ber of homes for sale has fallen on an an­nual ba­sis for the past 25 months. There were 1.96 mil­lion homes for sale in June, down 7.1 per­cent from a year ear­lier.

Ris­ing prices and a lim­ited sup­ply are start­ing to thwart would-be buy­ers.

Pre­vi­ously owned home sales slipped 1.8 per­cent in June, the re­al­tors’ group said Mon­day, and are nearly flat

from a year ear­lier.

Even with the de­cline in sales, there are plenty of in­ter­ested buy­ers. The drop in to­tal list­ings mostly re­flects soar­ing de­mand, ac­cord­ing to real es­tate data provider Zil­low.

The num­ber of homes listed each month has been sta­ble for most of the past five years. About 560,000 homes were put on the mar­ket in June, about the same as were listed in June 2016 and June 2015.

But would-be buy­ers are snap­ping up homes much

faster. Ac­cord­ing to the Re­al­tors, the typ­i­cal home is sold in just 28 days, down from 34 days a year ago.

“Sooner or later some­thing will have to give,” Svenja Gudell, chief econ­o­mist at Zil­low, said. “De­mand will fade, builders will be­gin de­liv­er­ing more new homes and/or more sell­ers will start com­ing out of the wood­work. But for the time be­ing, ex­pect this strong sell­ers’ mar­ket to con­tinue.” In­for­ma­tion for this ar­ti­cle was con­trib­uted by Pa­tri­cia Laya of Bloomberg News.

AP/JOHN BAZEMORE

The frames for new town homes are com­pleted in this May 16 photo from Wood­stock, Ga. A home price in­dex re­leased Tues­day based on sales in 20 U.S. cities said prices in­creased 5.6 per­cent in May.

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