Home prices post strongest gains since 2006

Home prices are climbing at the fastest clip since 2006, according to a new survey from the S&P/Case-Shiller Home Price Index.

The nationwide survey found that home prices are up 11.2 percent over the last year, and rose 3.2 percent in the third quarter. The growth has been particularly strong in 20 metropolitan areas tracked by the index, which reported price gains of 13.3 percent in the last year.

Particularly in the Western parts of the country, the housing gains have been dramatic. In the last year, home prices in Las Vegas have climbed 29.1 percent, and 12 cities posted double-digit gains over that time frame. In addition to Las Vegas, Los Angeles, San Diego and San Francisco have all seen home prices climb by over 20 percent over the last 12 months.

“The second and third quarters of 2013 were very good for home prices,” said David M. Blitzer, chairman of the S&P/Dow Jones Index Committee.

However, there are signs that the rally in the housing market could be losing a bit of steam. Nineteen of the 20 markets closely tracked by the survey decelerated in price gains in the third quarter.

But Blitzer contended that, in a way, that slowdown could be positive news, as there has been growing concern that the rapid climb in home prices could be the start of a new housing bubble. If markets are showing signs of slowing, that is a good sign that there is not a rush to inflate that bubble, he said.

“The strong price gains in the West are sparking questions and concerns about the possibility of another bubble,” he said. “However the talk is focused on fear of a bubble, not a rush to join the party and buy. Moreover, other data suggest a market beginning to shift to slower growth rather than one about to accelerate.”

In the last month, Detroit was the city to post the strongest gains. However, that hard-hit city, currently going through bankruptcy, is also the only major market that has yet to reach levels it previously hit in 2000.

Charlotte's was the only market of the 20 tracked to actually see prices dip in the last month, the first time that has happened there in a year.