While home values are improving, nothing is pointing to a straight-up recovery.
Home values across the country continued to rise in December, ending 2012 on a firm note, as the U.S. housing market found a footing on increasing demand for homes and improving home-buyer and -builder confidence.
On a national level, the National Composite—a quarterly figure comprising all nine U.S. census divisions—ended December with a 7.3 percent year-on-year gain. The 10-City and 20-City Composites also ended the year with annual gains of 5.9 percent and 6.8 percent year-on-year, respectively, the latest S&P/Case-Shiller Home Price Indices report released today showed.
In all, an average home in the U.S. now costs roughly what it did in the fall of 2003, and remains about 30 percent off its peak value hit sometime in 2006.
"Home prices ended 2012 with solid gains," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in the report. "Housing and residential construction led the economy in the 2012 fourth quarter."
Housing was at the center of the credit crisis that led the entire U.S. economy into a recession in 2008. Many see a bona fide recovery in housing as key for any sustained U.S. economic growth ahead, but that recovery has stumbled repeatedly on still-high unemployment rates, tight credit availability and plenty of inventory.
It seems that this time, the recovery is for real, and is here to stay, Blitzer told IndexUniverse in a recent interview, even if that's not to say that housing values will only move higher in months ahead.
"Prices have been going up, and, equally important, housing starts, existing home sales, new home sales and builder confidence are all going up, even if not every month," Blitzer told IndexUniverse on the sidelines of the InsideETFs conference earlier this month. "This is a consistent upward trend, and everything says it's for real."
Bona Fide Recovery?
Still, a closer look at the National Composite, for instance, shows that while the index ended the year with a year-on-year gain of 7.3 percent after having slipped in the first quarter of 2012, in the fourth quarter, the national index actually dropped after having recovered in the second and third quarters, the report showed.
"These movements, combined with other housing data, suggest that while housing is on the upswing, some of the strongest numbers may have already been seen," Blitzer said.
Access to credit remains an issue for a lot of homebuyers.
"The banks have not gotten any easier or more generous to any great extent since they locked the doors four or five years ago," Blitzer said. "That's a concern in a lot of places."
In December, only nine of the 20 cities surveyed saw month-on-month gains, with Las Vegas leading the pack with a 1.8 percent rise in home values.
On the flip side, Chicago was the worst-performing market, seeing home values there in December decline 0.7 percent from prior-month levels, the report said.
Atlanta and Detroit have staged solid recoveries from recent lows, but an average home in either of those markets today still is worth less than it was in January 2000. A home in Detroit costs on average 20 percent less than it did more than 13 years ago.