January was the second consecutive month-over-month increase in house prices and the eighth consecutive year-over-year increase. According to the most recent release by Standard and Poor’s, the S&P/Case-Shiller 20-City Composite House Price Index rose by 0.1% on a not seasonally adjusted monthly basis and the 10-City Index rose by 0.2% on a not seasonally adjusted monthly basis. In the 12 months ending in January 2013, house prices rose by 8.1% according to the 20-City Composite Index and 7.3% according to the 10-City Composite Index.

Year-over-year house price growth has been generally widespread. As Chart 1 illustrates, house prices have risen on a not seasonally adjusted 12 month basis in each city tracked by the 20-City Composite Index. House prices in Phoenix experienced the largest price increase. In January 2013, Phoenix house prices rose by 23.2%, the fifth consecutive month that house prices have experienced a year-over-year increase greater than 20.0%. As Chart 2 illustrates, although house prices in Phoenix have experienced rapid increases in recent months, they remain 44.3% below their June 2006 peak.

In a previous post it was noted that despite recent growth, house prices in the West have not reached the peak level experienced during the housing boom. However, comparing current house prices to this level may not be the best indicator of whether house prices in Phoenix have normalized. According to Chart 3, Phoenix house prices began to climb rapidly during the boom, before falling sharply. In the three years prior to this January 2004-June 2006 period, growth of Phoenix house prices mirrored the house price trends of Denver and Dallas, cities which experienced much smaller house price appreciation during the boom period and are closest to regaining their peak levels. Denver is 4.4% from its peak and Dallas is 4.7% below its high. After a steep decline, the trend of house prices in Phoenix has returned to a pace that is nearly similar to the trend of house prices in Denver and Dallas. Moreover, although house prices in Phoenix have experienced strong growth in recent months, its trend continues to remain at a level roughly on par with these two cities.

For full histories of the composites and 20 markets included in the Case-Shiller composites, click here cs.