• Homes west of the Mississippi River are seeing strong home price growth and fueling solid growth in the overall economy.
  • San Francisco, Denver and Dallas reported the highest year-over-year gains of the 20 cities covered by the index.
  • On a national basis, prices increased 4.7 percent year-over-year, according to the indices.

Homes west of the Mississippi River are seeing strong home price growth and fueling solid growth in the overall economy, according to the S&P/Case-Shiller Home Price Indices for July 2015.

According to the indices, 14 cities, most of them in the West, reported greater price increases in the year ending in July than the year ending in June.

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San Francisco, Denver and Dallas reported the highest year-over-year gains of the 20 cities covered by the index, with price increases of 10.4 percent, 10.3 percent and 8.7 percent, respectively.

Other Western cities faring well in the year-over-year analysis:

  • Portland, which had an 8.-5 percent increase
  • Seattle, which had a 7.3-percent increase
  • Las Vegas, which had a 6.2-percent annual increase
  • Los Angeles, which had a 6.1-percent increase
  • Phoenix, which has the longest streak of year-over-year increases, had a 4.6-percent annual increase

On a national basis, prices increased 4.7 percent year-over-year, according to the indices.

Cities in other areas of the country experiencing strong annual price growth were:

  • Miami, which had a 7.3-percent increase
  • Atlanta, which had a 5.8-percent increase
  • Tampa, Florida, which had a 5.5-percent increase
  • Detroit, which had a 5.4-percent increase

Three California cities experienced their largest cumulative price increases since January 2000: Los Angeles, which saw a 138-percent gain; San Francisco, which saw a 116-percent gain; and San Diego, which saw a 115-percent gain.

Still, S&P Dow Jones Indices noted that the Sunbelt cities of Miami, Tampa, Phoenix and Las Vegas — which it called “the poster children of the housing boom” — have yet to make new all-time highs. Cities with the smallest price gains since January 2000 are Detroit (3 percent) and Cleveland (10 percent), according to the indices.

David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, noted that these positive gains helped to fuel the economy’s 3.9-percent annual rate in the second quarter.

“Residential investment grew at annual real rates of 9 percent to 10 percent in the last three quarters, far faster than total GDP,” Blitzer said. “Further, expenditures on furniture and household equipment, a sector that depends on home sales and housing construction, also surpassed total GDP growth rates.”

“Residential investment grew at annual real rates of 9 percent to 10 percent in the last three quarters, far faster than total GDP.” – David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices

With many other positive indicators of current and predicted future housing activity, including gains in sales of new and existing housing and the National Association of Home Builders’ sentiment index, even an interest rate increase by the Federal Reserve is unlikely to derail the strong housing market performance, Blitzer said. The Fed’s increase is expected in December.

Stephen Phillips, president of Berkshire Hathaway HomeServices, agreed that there is no reason to fear a rate increase, but he said the indices’ results reflect “a dramatically undramatic market.”

“The market is ‘steady as she goes,’” Phillips said. “We are continuing on a positive trend that goes back three years, steady mid-single-digit gains for the index. Demand is reasonably good in many markets. Supply is relative low in many markets. Interest rates remain supportive. Prices have responded predictably to all those factors.”

Phillips said he expects the current environment to continue, but said he is concerned that prices are rising more rapidly than buyers’ incomes, “which puts pressure on affordability.”

Email Amy Swinderman.

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