Home prices in 20 U.S. cities rose in November at the slowest pace since early 2015, decelerating for an eighth straight month as buyers balk at the ever-receding affordability of properties.
The S&P CoreLogic Case-Shiller index of property values increased 4.7 percent from a year earlier, down from 5 percent in the prior month, and below the median estimate of economists, data showed Tuesday. Nationally, home-price gains slowed to a 5.2 percent pace.
Home sales drifted downward for much of 2018, causing homes to sit on the market longer and price growth to slip. Buyers have found it difficult to afford a home due to a shortage of properties at a median price of roughly $250,000, last year’s rising mortgage rates and roughly six years of home price growth exceeding wage gains.
“Home prices are still rising, but more slowly than in recent months,” says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. “The pace of price increases are being dampened by declining sales of existing homes and weaker affordability.”
The Las Vegas metro area posted the largest price gains at 12 percent, followed by Phoenix at 8.1 percent and Seattle at 6.3 percent. All 20 of the metro areas tracked by the index reported price gains, with Washington, DC posting the slowest gain at 2.7 percent.
Still, 2019 has offered consumers some relief as the average 30-year mortgage rate has dipped to 4.45 percent from a recent peak of nearly 5 percent. This could help to boost demand after sales declined last year.
The National Association of Realtors said last week that sales of existing homes in 2018 fell 3.1 percent from the prior year to 5.34 million units, the lowest level since 2015.
- The data further underscore a slowdown in the housing market, along with figures showing sales cooled throughout 2018 as mortgage rates increased, compounding the problem of affordability for many potential buyers already facing steep property prices and scarce supplies.
- At the same time, economists don’t expect the market to crash, given support from tax cuts, rising wages and general economic health. In early 2019, falling mortgage rates, slower price gains and an expanding supply of homes may attract more buyers.
- The seasonally adjusted 20-city index advanced 0.3 percent from the prior month, also below the 0.4 percent median estimate of analysts. Economists watch the year-on-year gauge to better track trends, which show home-price gains have been outpacing wages.
- The housing market has undergone some swings since November, with other figures showing sales plummeted in December. So far this year, applications for home-purchase loans have jumped amid a drop in mortgage rates.
- All 20 cities in the index showed year-over-year gains, led by a 12 percent increase in Las Vegas and 8.1 percent advance in Phoenix.
- The weakest gains were in Washington, Chicago, and San Diego. New York also had a subdued increase, at 3.5 percent.
- Prices in Cleveland, San Francisco and Seattle fell from the prior month on a seasonally adjusted basis.
Material from Bloomberg and the Associated Press has been used in this report.
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