Home price rise reflects recovery

  • Article by: ADAM BELZ , Star Tribune
  • Updated: December 26, 2012 - 11:13 PM

Twin Cities prices were up 9.2% in October compared with a year ago, the Case-Shiller report said, ahead of most other large U.S. cities.

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This home was for sale in October in the Chicago area, where home prices were down 1.3 percent from a year ago, according to Wednesday’s report.

Photo: Nam Y. Huh, Associated Press

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Home prices improved again in October, in the latest indication that 2012 could be the year the housing market finally bottomed.

Seasonally adjusted prices rose 4.3 percent over the year in 20 major U.S. cities, according to the latest Standard & Poor's Case-Shiller home price index.

Phoenix, Detroit, Minneapolis-St. Paul, San Francisco and Miami grew the fastest, according to data released Wednesday. Only Chicagoans and New Yorkers saw average home values decline.

Twin Cities-area home prices grew twice as fast as the average of 20 major U.S. cities.

"Our inventory is so low and buyer demand is so strong that this is going to be a very healthy winter," said Aaron Dickinson, a sales agent with Edina Realty.

Seasonally adjusted Twin Cities home prices rose 9.2 percent in the 12 months that ended in October. Among major U.S. cities, only Phoenix and Detroit performed better.

Dickinson said the Twin Cities arrived early to the subprime mortgage crisis and recovered early, too. Minnesota's relatively low unemployment -- 5.7 percent compared with the national 7.7 percent -- has also helped, he said.

Excluding the seasonal adjustment, prices dropped in Minneapolis-St. Paul and several other cities between September and October. But that's because northern housing markets hibernate in the winter.

"Prices are going to stay fairly stable throughout the winter months, which is a change from a few years ago when we saw substantial price decreases in the winter," Dickinson said.

Nationally, the year-over-year home price gains offer more evidence that the housing market probably bottomed earlier this year.

"It is clear that the housing recovery is gathering strength," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. "Higher year-over-year price gains plus strong performances in the Southwest and California, regions that suffered during the housing bust, confirm that housing is now contributing to the economy."

Prices and sales typically slow toward the end of the year, so the non-seasonally adjusted Twin Cities index fell 0.7 percent from September to October and the national index fell 0.1 percent.

But when adjusted for seasonality, the Twin Cities index rose 0.3 percent on the month and the index of the 20 major U.S. cities rose 0.7 percent.

Adam Belz • 612-673-4405 Twitter: @adambelz

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