US house prices now are 0.5 percent higher than their pre-recession peak, according to a Tuesday update to the S&P CoreLogic Case-Shiller Indices.
The Home Price NSA Index, which covers all nine U.S. Census Divisions, also showed annual increases on the 10-City Composite measurement, with a 5.1 percent jump, and the 20-City Composite, which showed a 5.7 percent uptick. The January increase was the largest in 31 months.
The growth in housing prices surpassing inflation and rising wages more than twofold is, first of all, due to the shortage of supply, which makes it hard for Americans to turn from renting to owning homes.
An index measuring 20 cities shows that home prices increased an annual 5.7% in January, while a separate 10-city index shows that home prices gained 5.1%.
According to David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Down Jones Indices, the uptick in home prices shouldn't sound off alarm bells just yet.
Three or four additional rate increases, in conjunction with rising prices and low inventories of homes for sale, could hurt home affordability.
Homes in the Seattle, Portland and Denver markets saw the biggest price gains.
In Charlotte, the higher home prices reflect the tight inventory of single-family homes. Prices rose over the month in 19 cities seasonally adjusted, Case-Shiller said. After seasonal adjustment, the month-over-month gains were 0.6% on the national index and 0.9% on both the 20-city and 10-city composite indexes. Twelve cities reported greater price increases in the year ending January 2017 versus the year ending December 2016.
"At some point, this process will force prices to level off and decline - however we don't appear to be there yet", Blitzer said.
"Given the market's current strength and the economy, the small increase in interest rates isn't expected to dampen home buying". This situation is not that unusual among the major metro areas, though Chicago is worse off than numerous others, despite the fact that the nation as a whole is experiencing record home prices. The slowest was in New York City's metro area, at 3.2 percent.