Home prices are pretty high. In some cities, they're really, really high.

Home prices nationally are well above those of the depths of the Great Recession, and slightly below their 2006 peak.

Steve Dipaola/Reuters/file
Homes are seen for sale in the northwest area of Portland, Oregon. U.S. home prices are strong, indicating the housing market recovery remaines intact despite signs of a sharp moderation in economic growth in recent months.

Home prices are starting to reach pre-recession peaks, with Dallas, Denver, and Portland, Ore., reaching all-time highs.

According to Tuesday’s release of S&P/Case-Shiller data on US home values up to November 2015, home prices are 4.8 percent below their peak in July 2006, and nearly 30 percent above the depths of the Great Recession in January 2012.

“Home prices extended their gains, supported by continued low mortgage rates, tight supplies and an improving labor market,” says David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, which tracks the performance of the financial markets.

The factors add up to a great market for home sellers, and not so great for home buyers, as a lower supply of homes is leading to higher prices, especially in cities such as San Francisco, Las Vegas, and Phoenix, where prices have appreciated by 74 percent, 60 percent, and 52 percent respectively from January 2012 to November 2015.

S&P Dow Jones Indices
Home price appreciation since January 2012 trough (Source: S&P/Case-Shiller Home Price Indices

By comparison, as of Friday, the S&P 500 – an index of 500 large stocks that is widely seen as a good measure of the stock market – is up 46 percent from January 2012. This is better than national home price appreciation average, and about the same as Los Angeles.

Though mortgage rates are expected to stay well below the historic average of 6 percent, a boon for home buyers, wages would need to grow to make homes affordable to most Americans, as the Associated Press points out.

“The dearth of inventory has really taken its toll on the market,” Nela Richardson, chief economist at the Massachusetts real estate brokerage Redfin told the AP.

“Homebuyers this year are motivated but not desperate, and they refuse to overpay,” she said. “Without more listings what we’ll see are higher prices and lower sales volumes, a lousy way to start a new year for homebuyers.”

Cities such as Portland, San Francisco and Denver saw double-digit grown in home prices in November 2015 compared to November 2014. Portland’s home prices grew by 11.1 percent, San Francisco’s by 11 percent, and Denver’s by 10.9 percent, reports the S&P/Case-Shiller.

Phoenix is notable because November was the 12th consecutive month of home price increases in the city, with a 5.9 percent increase over November 2014. Detroit also saw progress with a 6.3 percent rise in prices in November 2015 over the previous year. The city also saw the largest annual increase in gains between October and November.

Overall, the housing market is doing well relative to other parts of the economy, the S&P points out. These include the oil and energy sectors, which have struggled with a 75 percent drop in oil prices in the last 18 months, and a strong US dollar, which is slowing exports.

Housing is probably one of the pockets of strength in the economy because employment is better, interest rates are lower and prices have come back,” Krishna Memani, chief investment officers at New York investment firm Oppenheimer Funds, told Bloomberg.

“If you talk to builders, there’s decent strength in the regular (non-luxury) US housing market. If that cracks, then we are going to have a significant problem,” he said.

Housing, as the S&P report points out, is not large enough to offset other weak spots in the economy.

of stories this month > Get unlimited stories
You've read  of 5 free articles. Subscribe to continue.

Unlimited digital access $11/month.

Get unlimited Monitor journalism.