Housing Prices, Building Permits Show Marked Recovery

Building permits highest since 2008, national housing prices reach pre-crash levels.

Housing prices prices rose 2 percent from the second quarter of 2013, and construction permits are being filed at the highest rates since June 2008, according to the Commerce Department.
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The housing market continued its steady recovery in recent months to levels not seen since the financial crash in 2008, according to three reports published on Tuesday from the Standard & Poor's Case-Shiller Home Price Indices and two government agencies.

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Building permits increased 6.2 percent in October to an annual rate of approximately 103 million, which is the most applications for housing construction filed since June 2008, according to a report on Tuesday from the Department of Commerce. Building permits increased 13.9 percent in October compared with that same month in 2012. The annual adjusted rate of building permits was 974,000 in September 2013. The government shutdown delayed the department's data collection schedule so the report for the starts and completions of housing is being delayed until Dec. 18.

The Federal Housing Finance Agency also published a positive home price index on Tuesday for the third quarter of 2013, using data based on mortgages bought, sold or guaranteed by government-sponsored Fannie Mae and Freddie Mac. Prices rose 2 percent from the second quarter of 2013, marking the ninth consecutive quarterly increase in the index, the first time since 2009 that the national house price level is higher than prior to the housing market crash in 2008. The federal housing price index rose in 48 states and the District of Columbia during the third quarter. The top five states with the most improved housing prices were Nevada, California, Arizona, Florida and Washington.

(S&P Dow Jones Indices/CoreLogic)

Information from the private sector on Tuesday also reflected a steadily-improving housing market. The S&P Case-Shiller U.S. National Home Price Index rose 3.2 percent in the third quarter of 2013. That national home price index increased 11.2 percent during the last four quarters, which is the strongest showing since the peak of the housing boom in 2006, said a statement from David Blitzer, chairman of the index committee. The composites of prices in major U.S. cities also showed San Francisco, Los Angeles, and Chicago seeing their highest annual price growth since before the housing bubble peaked, Blitzer explained in his statement.

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"The strong price gains in the West are sparking questions and concerns about the possibility of another bubble," Blitzer said. "However the talk is focused on fear of a bubble, not a rush to join the party and buy. Moreover, other data suggest a market beginning to shift to slower growth rather than one about to accelerate. Existing home sales weakened in the most recent report, home construction remains far below the boom levels of six or seven years ago and interest rates are expected to be higher a year from now."

Looking ahead to 2014, Blitzer said the amount of homes in foreclosure is declining as the housing market recovers from the financial crisis.

"The longer run question is whether household formation continues to recover and if home ownership will return to the peak levels seen in 2004," Blitzer explained.

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