Home-prices slowed in April, but housing economists point to April as a down month and further supports the assumption that the housing market isn’t overheating. The S&P/Case Shiller Home Price Index, covering the entire nation, rose 4.2 percent in the 12 months ended in April and weaker than the 4.3 percent increase in March.
The 10-city and 20-city indexes showed weaker increases in April than in March. The 10-city index gained 4.6 percent from a year earlier, basically unchanged from 4.7 percent in March. The 20-city index gained 4.9 percent year-over-year, compared to a 5 percent increase in both March and February.
In 2013, we were seeing unsustainable inflation in home values as price were rising in the low double digits, raising fears that many home buyers would be priced out of the market because incomes were growing at only 2 percent at best. We’ve moved from something we couldn’t sustain to something that’s a lot more reasonable in 2015.
Month-over-month and not seasonally home prices were tame, according to the report. The Case-Shiller Index rose 1.1 percent from March to April. The 10-city index saw a 1 percent month-over-month change and the 20-city index saw a 1.1 percent change over the month. After seasonal adjustment, the national index was unchanged and the 10- and 20-city composites were up 0.4 percent and 0.3 percent.
San Francisco, one of the country’s hottest markets, seems to finally be leveling off. Year-over-year, prices in San Francisco grew 10 percent in April compared to 10.3 percent in March. In late 2013, prices were growing 23.5 percent year-over-year.
In Denver, prices grew 10.3 percent year-over-year, roughly the pace that they have been growing at over the last several years.
Case Shiller gives a lagging read on the housing market, showing how it was performing more than a month ago. Poor weather may have contributed to a slow market in April. A number of reports showed weak growth in April, but early indicators are that the market has picked up momentum since then. The pace of existing home sale rose 5.1 percent in May from April, according to the National Association of Realtors. The median sale price for a previously owned home was up 7.9 percent to $228,700 from a year earlier in May.
Housing economists are predicting the 2015 could be the best year for the housing market since the housing bust of 2007, as more first-time home buyers enter the market. However, we haven’t seen much lately about any real increase is wages that is having a serious effect on affordability and the latest data shows any increase remain at about 2 percent. President Obama however, just signed into law new overtime rules and that should create some improvement in wages for the middle class.
The National Association of Realtors is predicting that prices in 2015 will surpass their 2006 peak although factoring a decade later those prices are more modest. Indeed, after a huge boom and bust housing economists said that they are hopeful the housing market is finally settling down into healthy levels of growth. However, new-home starts are well below typical levels, contributing to a shortage of inventory that has been driving up prices.
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