US house price growth in line with forecasts in August, S&P says

Home price gains in the US picked up slightly in August but more so if low inflation readings are taken into account, according to Standard&Poor’s.

The rating agency’s house price index for the 20 largest US metropolitan areas increased by 0.1% month-on-month (5.1% year-on-year) in August, according to S&P’s Case Shiller index.

That was exactly in line with forecasts from economists and up from the print of 4.9% seen in the year before.

David M. Blitzer, Managing Director at S&P, pointed out how other recent housing indicators had also shown strength.

Blitzer added that: “after removing the effect of inflation, prices rose almost as quickly in 2013 as they did in 2005-2006, the peak of the boom. The inflation adjustment is based on the consumer price index.”

"One result [of low inflation] is that a 5% price increase in the value of a house means more today than it did in 2005-2006, the peak of the housing boom when the inflation rate was higher. The rebound from the recent lows was faster than the 1997-2005 housing boom, and also much less driven by inflation.”

San Francisco, Denver and Portland reported the highest year-over-year gains among the 20 cities surveyed by S&P, with price increases of 10.7%, 10.7%, and 9.4% year-on-year, respectively.

Fifteen cities reported greater price increases in the year ending August 2015 versus the year ending July 2015, S&P added in a statement.