Home prices are continuing a steady rise, according to the Standard & Poors/Case-Shiller National Home Price Index. For March (the most recent month reported) single-family home prices were increasing at an annual rate of 4.1% nationally, versus an annual rate of 4.2% for February. By contrast, these prices were rising at a double-digit annual rate about a year and a half ago. Home prices have risen on a year-over-year basis every month for almost three straight years.
In February, seventeen of the specific cities included in the twenty-city index registered increasing growth while in March only ten showed increasing growth. San Francisco had the highest annual price increase at over 10% while Cleveland was at the opposite end of the spectrum with just over a 1% annual rate of price increase. Prices in the Composite Indices are now at levels from ten or so years ago, but still are below the peak prices achieved shortly after that.
Some economists feel that an optimal annual price growth is 5%. At this rate buyers tend to view homes as affordable while owners feel that they are building home equity at a comfortable pace, without much fear by either group of the onset of another housing bubble. With more buyers now paying cash or getting fixed- rather than riskier adjustable-rate mortgages, and fewer new homes being built, it is far less likely that another bubble looms on the American horizon.
(Standard & Poors calculates single-family home sales price data monthly, publishing a national index as well as 10- and 20-city major Metropolitan Statistical Area Composite Indices. The prices are based on methods which take into account the quality of homes sold.)