The supply crisis in the housing market is not letting up, and consequently neither are the gains in home values.
National home prices continued their run higher in November, rising 6.2 percent annually on S&P CoreLogic Case-Shiller’s most broad survey, up from 6.1 percent in October. Another S&P index of the nation’s 20 largest housing markets showed a 6.4 percent gain, higher than analysts had expected.
Prices nationally are now 6 percent higher than their 2006 peak, while those in the top 20 markets are still 1.1 percent lower.
“Home prices continue to rise three times faster than the rate of inflation,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.
Blitzer blames the continued lack of supply for the price gains, citing a very slow recovery in the home construction market. Home builders are ramping up production but are still not at even historically normal levels, never mind the huge pent-up demand in the market.
“Without more supply, home prices may continue to substantially outpace inflation,” added Blitzer
Local metropolitan markets seeing the highest gains are those that were rising fastest before the financial crisis. San Diego, Los Angeles, and Las Vegas continue to see strong gains. Seattle and San Francisco are seeing the highest gains of all, due to strong employment and very tight supply in both those markets.