Is This the Housing Market’s Last Hurrah Before a Seasonal Downturn?

Data for the S&P/Case-Shiller Home Price Indices show a further increase in home prices for the third quarter of 2012.

The U.S. national composite grew 3.6 percent year over year and 2.2 percent quarter over quarter. The national composite reflects single-family home prices for the nine U.S. Census divisions compared to a base value of 100 in January 2000. The third-quarter national composite level of 135.67 represents a 35.67-percent appreciation in value for a typical home since January 2000.

The 10- and 20-City Composites posted annual returns of 2.1 percent and 3.0 percent respectively in September. The 10-Composite came to a level of 158.93 and the 20-City Composite came to 146.22 for the month. This marks the sixth consecutive month of increasing home prices.

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The continuing recovery in home prices follows other positive housing market indicators. Earlier in November, the U.S. Department of Housing and Urban Development released data that showed privately-owned housing starts grew 3.6 percent month over month and 41.9 percent year over year in October. Housing completions grew 14.5 percent month over month and 33.6 percent year over year.

The National Association of Realtors released a statement at about the same time indicating that total existing-home sales for October rose 2.1 percent month over month and 10.9 percent year over year.

The National Association of Home Builders also released a report showing builder confidence at 46 on a scale between zero and 100, its highest level since May 2006. Positive housing market news is rounded out by record-low mortgage rates, with the average commitment rate on 30-year fixed-rate mortgages falling to 3.38 in October.

These indicators combine to create a fairly positive housing market outlook despite other economic headwinds. However, a full-blown housing recovery is unlikely to occur while unemployment remains high and GDP growth remains low.

Compounding concerns over the fiscal cliff, the fact that the market is entering a seasonally weak time of year is putting the breaks on the housing recovery. Fourth-quarter housing numbers could very likely follow GDP numbers in showing contraction before further recovery.

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