Home prices in Dallas-Fort Worth continued to advance in December and finished 2013 with a gain of more than 10 percent at year’s end, according to the latest Standard & Poor’s/Case-Shiller report.
December marked the 23rd consecutive month of year-over-year price gains in North Texas but the first double-digit percentage gain, according to Case-Shiller data. It reinforced a regional housing rebound that saw existing home sales last year reach the highest point since the housing industry’s downturn.
Nationwide, home prices rose by a healthy 13.4 percent for all of 2013, mostly because of big gains earlier in the year. The 20-city S&P/Case-Shiller home price index declined 0.1 percent from November to December, matching the previous month’s decline, as brutally cold weather and higher costs slowed sales.
The figures follow other reports showing that home sales and construction have begun to slow after strong gains earlier last year. Most economists expect the housing recovery to continue this year, though likely at a slower pace.
“The market should continue its slow march back to normal, as annual [price] appreciation rates fall to more sustainable levels around 3 percent,” said Stan Humphries, chief economist at real estate data provider Zillow.
In Dallas-Fort Worth, Jim Fite, president of Century 21 Judge Fite Co., said the rising area home prices reflect supply and demand. As inventories of new and existing homes continue to dwindle, home prices are moving up as more people continue to move to the area.
“Home builders are still ramping up,” Fite said. “They can’t keep up with demand. Inventories continue to drop significantly and no new inventory is coming on the market. The question is, how long does this last? I don’t see it changing anytime soon.”
The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The December figures are the latest available.
“Gains are slowing … and the strongest part of the recovery in home values may be over,” said David Blitzer, chairman of the S&P’s index committee. “Higher home prices and mortgage rates are taking a toll on affordability.”
Even some cities in warmer areas saw declines. Home prices in Phoenix fell 0.3 percent, the first drop after 26 months of big increases.
In addition to DFW, other cities that recorded higher prices in December were Las Vegas, Miami, San Francisco, Tampa, Fla., and Washington, D.C.
Mortgage rates are roughly a full percentage point higher than they were last spring, although they remain low by historical standards. Mortgage buyer Freddie Mac said last week that the average rate on the 30-year loan is 4.33 percent.
Sales of existing homes plunged in January to the slowest pace in 18 months. And builders broke ground on 16 percent fewer homes in January compared with December, the Commerce Department said this week. That was the second straight decline.
Builders also requested fewer permits in January for the third straight month, suggesting construction remained weak this month.
The declines came after existing home sales reached 5.1 million in 2013, the best showing in seven years. And builders started work on 976,000 houses and apartments last year, the most in six years.
Some economists say the Case-Shiller figures overstate recent price gains because they include foreclosures. Foreclosed homes usually sell at steep discounts. As the proportion of those sales declines, the index rises more sharply.
Other indexes that exclude foreclosures show smaller but steady increases.