US Housing Ticks Up, Seasonal Boost Fades

November 27, 2012

Housing prices moved higher in September, but gains are slowing ahead of winter.


U.S. home values continued their upward trajectory, rising for the sixth straight month in September, adding fodder to growing views that the U.S. housing market might have indeed bottomed out, even if its recent strength could in part be tied to seasonal momentum.

Both the 10-City and 20-City composites gained 0.3 percent in September vs. August, and were 2.1 percent and 3.0 percent higher year-on-year, respectively, according to the latest S&P/Case-Shiller Home Price Indices report.

That positive momentum was also seen in the national composite—an index that takes into account all nine U.S. census divisions and is released once a quarter. That benchmark was 2.2 percent higher in the third quarter from second-quarter levels. The national indicator in September was also 3.6 percent higher year-on-year.

In the last six months, U.S. home values have generally been rising after having slid to new cycle lows earlier this spring. Since the market peaked in 2006, home values have shed a lot of value, but in September they managed to come in, on average, just 29 percent below their 2006 highest marks—a clear improvement.

U.S. housing was at the center of the 2008 credit crisis that sent the U.S. economy into its worst downturn since the Great Depression, and its recovery remains a key requirement to convince analysts and economists that the stage is set for the overall economy to stage a sustainable expansion.

The Caveat

But it’s also worth noting that home values tend to be strongest during summer months when demand picks up and, to get right to the point, September marks the end of the summer buying season.

Even though most market participants and analysts are betting on a recovery, some local housing markets did start to see a deceleration already in September.

“We are entering the seasonally weak part of the year,” David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in the report.

“The headline figures, which are not seasonally adjusted, showed five cities with lower prices in September versus only one in August. In the seasonally adjusted data, the pattern was reversed: one city fell in September versus two in August,” Blitzer said.

Still, Blitzer argued that seasonality aside, the recent home-price performance points to a recovery.

“Despite the seasons, housing continues to improve,” he concluded. “With six months of consistently rising home prices, it is safe to say that we are now in the midst of a recovery in the housing market.”

How The Cities Measure Up

In September, 13 out of the 20 cities surveyed saw month-on-month price gains—meaning seven of them saw home values decline in September vs. August.

On an annual basis, 17 of them saw home values rise year-on-year, with Phoenix leading the pack with the highest increase in annual rates. Home values in Phoenix in September were 20.4 percent higher than what they were just a year ago.

But Detroit and Washington, D.C. saw a “slight deceleration” in their annual rates of improvement, the report said, even if both markets still remained higher on the year, with home values there up 7.6 percent and 3.2 percent, respectively, year-on-year.

That means the improvement in home values in those markets has started to subside. Also noteworthy is the fact that in Detroit, a home in September still cost some 20 percent less than it did in January 2000—almost 13 years ago.

Detroit, as well as Atlanta and Las Vegas, are in fact the only cities where average home prices remained below their January 2000 levels, the report said.

Meanwhile, home values in New York and Chicago in September actually dropped year-on-year, having slid 1.5 percent and 2.3 percent, respectively, from their September 2011 levels.



Want to learn more about smart-beta ETFs? Check out our smart-beta guide, essentials library and ETF screener!


A number of international equity funds—with and without currency hedges—led inflows on Friday, May 22. Total U.S.-listed ETF assets meanwhile held steady at $2.175 trillion.

'VGK' and 'VOO' paced Vanguard's issuer-leading inflows on Friday, May 22, as total U.S.-listed ETF assets remained at about $2.175 trillion.


By Olly Ludwig

Yields will one day head higher, so is it time to get bond exposure outside the U.S.?

By Rachael Revesz

Stop dancing around the subject, call women ‘women’ and let’s be a more visible part of this industry.

By Olly Ludwig

It’s no secret that hedge funds love ETFs, but what’s less appreciated is that their love of ETFs will likely spell their demise.

By Olly Ludwig

Yes, bond yields are ticking higher these days, but it’s important to keep the whole yield-curve picture in mind.


By Nasdaq Global Indexes

Bond exposure or bond performance? Only defined maturity indexes provide the latter.

By Invesco PowerShares

Invesco PowerShares and Market Strategies International’s second annual survey provides vital insights about smart beta and ETFs overall.

By Invesco PowerShares

Investors are implementing smart-beta exchange-traded funds (ETFs) in their portfolios in a variety of ways and for different reasons.