Home prices in Chicago continued to show improvement in December, according to the latest Case-Shiller indices.

Chicago home prices rose 11.3 percent year-over-year in December, according to the latest Case-Shiller Home Price Indices from Standard & Poor’s; that’s the city’s strongest yearly return since Dec. 1988.

Although prices were down 0.5 percent from November to December, there were two silver linings to the data: such a decline is natural for the wintry months; and, that specific decline is an improvement over Dec. 2012, when prices fell 1.2 percent from Nov. 2012.

National Home Prices Slowing Down?

On a national basis, home prices concluded their strongest year in some time, though there does seem to be evidence that prices are slowing down.

• National home prices closed out 2013 up 11.3 percent; quarterly, though, prices were down 0.3 percent from the third quarter.
• From November to December, the 10-City Composite was unchanged, though the 20-City Composite showed its second straight monthly decline of 0.1 percent.
• On a yearly basis, though, the numbers were quite strong, with the 10- and 20-City Composites rising 13.6 and 13.4 percent, respectively.
• Overall, only six of the 20 cities posted monthly gains in December, though all 20 cities saw yearly increases. Eleven cities did their their yearly increases slow.

Blitzer – Strongest Part of Home Value Recovery May Be Over

David M. Blitzer, the chairman of the Index Committee at S&P Dow Jones Indices, said that though the Case-Shiller had a spectacular 2013, the best may be behind it.

“The S&P/Case-Shiller Home Price Index ended its best year since 2005,” Blitzer said. “However, gains are slowing from month-to-month and the strongest part of the recovery in home values may be over. Year-over-year values for the two monthly Composites weakened, and the quarterly National Index barely improved. The seasonally adjusted data also exhibit some softness and loss of momentum.

“Recent economic reports,” Blitzer continued, “suggest a bleaker picture for housing. Existing home sales fell 5.1 percent in January from December to the slowest pace in over a year. Permits for new residential construction and housing starts were both down and below expectations. Some of the weakness reflects the cold weather in much of the country. However, higher home prices and mortgage rates are taking a toll on affordability. Mortgage default rates, as shown by the S&P/Experian Consumer Credit Default Index, are back to their pre-crisis levels but bank lending standards remain strict.”