April 26--Prices of homes in 20 major cities climbed 5.4 percent over the previous year, but Chicago is among the two cities with the smallest gains, according to the S/Case-Shiller home price index for February.
Home prices rose just 1.8 percent in Chicago, only slightly above the smallest gain in the country: Washington, D.C., at 1.4 percent. New York was the other national laggard, with a gain of just 2.1 percent over the previous year. S/Case-Shiller tracks prices in 20 major U.S. cities.
Portland, Ore., with prices up 11.9 percent, and Seattle, with an 11 percent gain, were the cities with the biggest gains. Denver, San Francisco and Dallas markets also experienced 9 percent gains compared against February 2015.
On a national basis, prices in February 2016 increased from January levels, although Chicago's prices dipped a little, falling 0.3 percent. Nationally, the trend of price rises month after month has been in place for seven months and suggests a continued housing recovery. Still, the gains in February were the smallest in five months, said Kristin Reynolds, economist for IHS.
She noted that prices in seven cities have surpassed their previous peaks: Denver; Dallas; Boston; Portland; Charlotte, N.C.; and San Francisco. Chicago continues to lag, as cities that experienced the most dramatic surges amid housing mania before the 2008 crash still are far from their peaks. Las Vegas; Phoenix; Tampa, Fla.; and Miami remain 25 percent below their peaks, Reynolds said.
Chicago is still 22 percent below the March 2007 peak, she said.
Housing analysts say that the strength of employment is a factor in home prices, but the major impact nationally, as well as locally, seems to be limited supply of homes for sale.
"Inventory of entry-level and middle-tier homes is down sharply, and home prices in those segments are rising more quickly as demand stays strong and the economy keeps chugging along," said Zillow economist Svenja Gudell. The Illinois Realtors reported last week that the inventory in Chicago is down 16.6 percent.
The S/Case-Shiller index is a three-month average of home prices, as opposed to raw data reported monthly by Illinois Realtors.
gmarksjarvis@tribpub.com
