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House Price Growth: Dallas (NOT Phoenix) Leads the Way
Michael Neal / NAHB / July 31, 2013
Following 19 consecutive months of year-over-year declines, house prices registered their twelfth consecutive year-over-year increase in May. Over this twelve month period, the S&P/Case-Shiller House Price Index – 20 City Composite grew by 12.2% on a not seasonally adjusted basis while the 10 City Composite rose by 11.8%. House prices in Phoenix registered their 9th consecutive month of year-over-year returns above 20.0% in May, rising by 20.6%. House prices in San Francisco (24.5%), Atlanta (20.1%), and Las Vegas (23.3%) also experienced year-over-year house price growth above 20.0% in May.
Rapid house price appreciation since the housing bust has received much attention, and based on this Phoenix has often been identified as a leader in housing market recoveries. But recent rapid price appreciation is a more nuanced phenomenon than this suggests. Housing markets currently experiencing the most rapid price appreciation tend to also be the markets that fell the farthest from their peaks. In contrast, markets with slower current house price appreciation, for example Dallas, are reaching new peaks in house prices, suggesting a more credible claim of market recovery.
The increase in house prices from the trough following the housing bust is highly correlated with the decline in house prices from the peak during the housing boom. As Chart 1 illustrates, house price growth following the housing bust has been strongest in cities that experienced that largest house price declines. According to the chart, Las Vegas and Phoenix were among the areas that experienced the largest peak-to-trough declines. These cities are now among the leaders in house price growth according to the S&P/Case-Shiller House Price Index – 20 City Composite.