Both the 10-city and 20-city composite home price indices posted year-over-year gains of 13.6%, soaring to their highest gain since February 2006 and hitting the seventeenth consecutive month of annual increases.
According to the latest S&P/Case-Shiller Home Price Indices, the two composites showed a small growth of 0.2% for the month of October, while 18 cities posted lower monthly rates in October than in September.
"Home prices in October continued their slow march forward from September’s levels, but continued to make leaps over the 2012 prices," Quicken Loans vice president Bill Banfield said. "The New Year will bring these two measures closer together as the yearly home price report begins to make more modest, sustainable increases; those that we find in a healthier economy."
But despite the positive news, David Blitzer, chairman of the index committee at S&P Dow Jones Indices, noted that monthly numbers are living on borrowed time and the boom is fading fast.
"The key economic question facing housing is the Fed’s future course to scale back quantitative easing and how this will affect mortgage rates. Other housing data paint a mixed picture suggesting that we may be close to the peak gains in prices," Blitzer said.
"However, other economic data point to somewhat faster growth in the new year. Most forecasts for home prices point to single digit growth in 2014," he added.
In October 2013, ten cities recorded positive monthly returns, with Las Vegas posting the largest gain of 1.2%, followed closely by Miami’s 1.1% monthly gain.
All 20 cities witnessed increases from October 2012 to October 2013 as 13 cities showed year-over-year acceleration from September to October 2013.
Las Vegas, Los Angeles and San Francisco continued to post increases of over 20%, with Las Vegas once again maintaining the lead. However, the city’s return did decrease two percentage points to 27.1%.
"As 2013 ends, all signs point to a slowdown in appreciation. But the Case-Shiller indices continue to show extreme home value gains that almost defy explanation," said Zillow Chief Economist Stan Humphries.
"The likely culprits are twofold: the indices use home price data from a three-month moving average, which dilutes the more recent signals of a slowdown, and they include foreclosure resales which register high home value appreciation when they are subsequently resold by a non-bank owner," Humphries said.
Overall, Humphries noted, "The broader market is cooling off, and consumers looking at more recent reports should embrace this slowdown, as it will make for a more balanced market in 2014 and beyond."
