Home Price Appreciation Slowing in a Majority of U.S. Cities

U.S. home prices continued their upward march in September, but the pace of appreciation slowed considerably compared with earlier in the year, the S&P CoreLogic Case-Shiller home price index shows.

The month-over-month increase was 0.4%, on an adjusted basis, while the year-over-year increase was 5.5%.

Without seasonal adjustment the month-over-month increase was 0.1%.

The 10-city and 20-city composites did not report any gains for the month.

On an unadjusted basis, the 10-city composite and the 20-city composite both posted 0.3% month-over-month increases.

Year-over-year, the 10-city composite increased 4.8%, down from 5.2% in the previous month, while the 20-city composite increased 5.1%, down from 5.5% in the previous month.

Las Vegas, San Francisco and Seattle reported the highest year-over-year gains among the 20 cities.

In September, Las Vegas led the way with a 13.5% year-over-year price increase, followed by San Francisco at 9.9% and Seattle at 8.4%.

Four of the 20 cities reported greater price increases in the year ended September versus the year ended August.

“Home prices plus data on house sales and construction confirm the slowdown in housing,” says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a statement.

Blitzer points out that fewer cities in the 20-city composite are now seeing appreciation.

“On a monthly basis, nine cities saw prices decline in September compared to August,” he says. “In Seattle, where prices were rising at double- digit annual rates a few months ago, prices dropped last month. The few places reporting larger gains including some of the cities which had the biggest gains and largest losses 10 years ago: Las Vegas, Phoenix and Tampa.”

Sales of both new and existing single family homes peaked one year ago in November 2017, Blitzer says.

“Sales of existing homes are down 9.3 percent from that peak,” he says. “Housing starts are down 8.7 percent from November of last year. The National Association of Home Builders sentiment index dropped seven points to 60, its lowest level in two years.”

“One factor contributing to the weaker housing market is the recent increase in mortgage rates.,” he adds. “Currently the national average for a 30-year fixed rate loan is 4.9 percent, a full percentage point higher than a year ago.”

However, Ralph B. McLaughlin, deputy chief economist and executive of research and insights for CoreLogic, points out that inventories are starting to increase in some areas, bringing improved balance to the housing market.

“Supply and demand are falling into balance,” McLaughlin says. “On the supply side, slow but steady growth in inventory is providing relief to homebuyers. On the demand side, years of price growth outpacing income growth, as well as rising mortgage rates, is making the cost of buying homes increasingly expensive.”

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