NPR Story
3:41 pm
Tue February 25, 2014

Home Prices See Biggest Annual Gain Since 2005

Home prices last year posted the largest annual gain since 2005. According to S&P/Case-Shiller price index numbers released today, U.S. home prices increased 11.3 percent in the fourth quarter of 2013, compared to the previous year.

The Wall Street Journal’s Jason Bellini joins Here & Now’s Jeremy Hobson to discuss the new data.


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This is HERE AND NOW from NPR and WBUR Boston. I'm Jeremy Hobson.

And we learn this morning that last year was the best year for home prices since 2005, before the housing collapse. That's according to the latest monthly report from S&P/Case-Shiller. Joining us with the details is The Wall Street Journal's Jason Bellini. Hi, Jason.

JASON BELLINI: Hi. Thanks for having me.

HOBSON: Well, where were the biggest gains in the country?

BELLINI: Well, This Case-Shiller report measures home prices in 20 major metropolitan areas based on repeat sales of single-family homes. We also got some specific cities. You got Chicago. Places there gained 11.3 percent from December of 2012 to December last year. This is the best year over the improvement since 1988 in Chicago. Dallas set a new price peak, posting a 10-percent gain. That's its largest since 2000. Las Vegas, Los Angeles, San Francisco, they've all had really strong gains. All above 20 percent. And Las Vegas, in fact, registered a gain of 28 percent - almost 28 percent year over year.

HOBSON: Wow. And where were the gains not so strong?

BELLINI: Well, you know, across the board, there were gains. But here's where there's a sub-headline to the headline that things were so great last year, and that is in December, the number slowed down. And, you know, look at Phoenix, Arizona, which is where I happened to be from, they have their first monthly decline since 2011, in December. Now, that ends for them a 26-month string of gains. And this could be significant because Phoenix is considered a bellwether for the Sun Belt, and that's because it's experienced really high levels of foreclosures like many other states and cities in the - other cities in the Sun Belt did. So we got to keep an eye to see whether that is an indication of declines coming.

HOBSON: Yeah. I remember just a few months back, I was in Phoenix and drove around the neighborhood with a realtor there who was talking about how after those big drops, that they were really starting to see some very good rebounds in Phoenix. So you're saying, in December, after 26 months of gains, the prices not doing so well, at least right now, in Phoenix. Now, you say December, Jason. That's a three-month lag, and that's what people say about this report, is that it might not be giving us the most up-to-date information, right?

BELLINI: Not necessarily the most up-to-date information. There's a lag, and that's because it's looking at the time when sale was completed and not when the deal was actually made, when the sale closed. So, yeah, you got, you know, several-month lag in there. So we really won't know what houses where selling out, what place they were selling at, you know, until three months from now, where December was.

HOBSON: Now, December is also in the middle of winter. Could cold weather be a factor?

BELLINI: It certainly could be. And December is historically a slow. And, you know, if we take a wider view of this whole thing, according to Case-Shiller's figures, U.S. place increased 11 percent in the fourth quarter compared to a year earlier, so, you know, looking, you know, at that wider span. But there's another index that - we got a report from the National Association of Realtors last Friday, and it showed that the number of houses sold, not the prices, but the number of sold began slowing in the middle of last year. And that was way before this nasty winter that we've been having out here.

HOBSON: And that said, Phoenix, Arizona, I've been talking to my parents, the weather out there is lovely. It's still pretty warm.

BELLINI: They love to brag about it. Yes.

HOBSON: Well - and, you know, the thing that many people been worried about it that as interest rates, which have been very low, and that's been helping to prop up housing market, as they start to climb, as the Fed falls back on its stimulus, home prices could go down further. What's going on with interest rates at this point?

BELLINI: Well, you're exactly right. The interest rates are projected to rise. Now, the Dallas fed put out a report and it said that, while the U.S. housing recovery probably continue for some time, it's pace would be affected by interest rates as well as the - very difficult to predict evolution of credit availability for prospective home buyers, as well as homebuilders and developers

HOBSON: And we will see what happens with all of that. Jason Bellini of The Wall Street Journal. Thanks as always, Jason.

BELLINI: Thank you.

HOBSON: This is HERE AND NOW. Transcript provided by NPR, Copyright NPR.

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