Following a 0.2 percent increase in September, the price of homes in the United States slipped 0.1 percent lower in October, according to Wednesday’s report on the S&P/Case-Shiller Index. Home prices in 12 of the 20 cities tracked by the index edged lower during the month, although prices are still up 4.3 percent over the last 12 months cumulatively, representing the largest one-year increase since May 2010. The annual increase outpaced economist predictions of a 4.0 percent rise.
Las Vegas led the monthly gainers in home values with a 2.8 percent increase in October to cap a 12-month gain of 8.4 percent. Phoenix homes rose for the thirteenth straight month to notch 21.7 percent gains in one year. Detroit, a city that took a beating in home values since the economy fell into a recession five years ago, was the only other city to record double-digit increases in the last year with a 10.0 percent change. Chicago paced the laggards on both a monthly and yearly basis with a 1.5 percent decrease in October and 1.3 percent decline since October 2011. New York City was the only other city in the 20-city composite to register a year-to-year drop in home prices with a 1.2 percent slide.
The data is consistent with other information, such as new and existing home sales, that shows a continuing, gradual recovery of the US housing market, despite high unemployment levels and strict lending criteria at banks. “It is clear that the housing recovery is gathering strength,” S&P’s David Blitzer said in the report.
The inventory of existing homes continues to shrivel, adding to premium prices for residences. The National Association of Realtors said last week that the number of houses for sale dropped to its lowest level in more than seven years in November while sales jumped to their highest level in three years.
Separately, the Federal Reserve Bank of Richmond reported Wednesday that manufacturing in the Atlantic region expanded during December, but at a slower rate than in November. The Fed’s manufacturing survey of current business conditions dropped from a 9 in November to a 5 in December. Readings above zero indicate expansion in activity. Meanwhile, revenue from services slumped in the month to a negative 2 from a 7 in November.
The markets began the day responding favorably to the housing information, but have since slid into the red by lunch as lawmakers ready to return from vacation to resume budget negotiations to avert the economy from going over the so-called fiscal cliff, a cocktail of automatic spending cuts and tax increases that will strip about $600 billion from the economy at the first of the year.
The Dow Jones Industrial Average is down 33 points, the S&P 500 is off by 7 points and the tech-heavy Nasdaq is 19 points lower after all being firmly in the green in early trading.