Home price growth still slow in U.S.

31 Dec 2014 | Author: | No comments yet »

Charlotte home price growth slows, mirroring national trend.

U.S. home prices rose in October at a slightly slower pace as real estate sales have fallen and affordability has increasingly become a challenge for potential buyers.

Home prices in the Seattle area deteriorated in October for the second month in a row, but posted solid annual gains, according to the S&P/Case-Shiller 20-city index released Tuesday.The Dallas area is among the top five markets in the country for home price increases in the latest Standard & Poor’s/Case-Shiller Home Price report.U.S. single-family home prices gained just 4.6% (on a seasonally-adjusted basis) over prices one year earlier, down from a 4.8% annual increase in September, the S&P/Case-Shiller National Home Price Index shows.

Dallas was among the markets that saw bigger price gains in October than the previous month. “We are seeing hints that prices could end 2014 on a strong note and accelerate into 2015,” S&P’s David M. However, growth eventually reached 21.5 percent in August 2013, fueled by investors fixing and flipping foreclosure resales coming out of the Great Recession. Prices for the metro Miami area, which includes Miami-Dade, Broward and Palm Beach counties, rose a seasonally adjusted 1.1 percent from September to October, Case-Shiller reported. Separately, the two indices tracking 10 and 20 specific cities in October gained an annual 4.4% and 4.5%, respectively, down from annual gains of 4.7% and 4.8% in September.

Blitzer said in the report. “Two months ago, all 20 cities were experiencing weakening annual price increases. “This time, 12 cities had weaker annual price growth, but eight saw the pace of price gains pick up,” he said. “Seasonally adjusted, all 20 cities had higher prices than a month ago.” Dallas-area home prices are now about 13 percent higher than they were before the recession and at a record level in the Case-Shiller index. Since then, as prices grew and the supply of foreclosure resales waned, the factors pacing the county’s housing market shifted back to affordability, wages, and employment. Those traditional factors won’t translate to large swings, but a more stable market, said Mark Goldman, a loan officer and real-estate lecturer at San Diego State University. “The market’s coming in for a soft landing,” he said. “We had been seeing double digits rates of increase a couple years ago and that’s not sustainable.

But home prices have outpaced lackluster wage growth, leaving many potential buyers unable to afford homes and causing both sales and price growth to stall this year. All of that has occurred despite an improving U.S. economy that has generated 2.65 million new jobs this year, with the unemployment rate dropping to 5.8 percent from 6.7 percent at the start of 2014.

Prices barely budged over the past 12 months in Cleveland (up 0.9 percent), Chicago (1.9 percent), New York (2 percent), Phoenix (2.1 percent) and Washington (2.2 percent). Goldman said he appreciated Shiller’s concern, and noted that people are willing to pay a large premium for urban living, especially in San Francisco, where cost of commuting is high. CoreLogic DataQuick, another real-estate tracker, reported that the median price for a resale single-family home in the county in October was $475,000, up 5.5 percent over last year. U.S. consumer confidence increased in December, bolstered by a brightening jobs situation that left perceptions about economic conditions at a high last seen in February 2008, according to a private-sector report released Tuesday.

Chicago and Cleveland reported monthly decreases of -1% and -0.7%, respectively. “Most national economic statistics, other than those connected to housing, posted positive reports in November and early December,” Blitzer noted. “Third quarter GDP was revised to 5% real growth at annual rates, and unemployment was at 5.8% as payrolls added over 300,000 jobs in November. Housing was somber: housing starts pulled back 1.6%, existing home sales were at 4.93 million, down 6.1%, and Blitzer is referring to housing reports earlier this month that showed groundbreakings on new homes down 1.6% in November compared to October, sales of previously-owned home down 1.6%, and new home sales also down 1.6% in November. (All three reports are a month ahead of the S&P/Case-Shiller report, which lags by two months.) These reports together show that the housing market is cooling off after the rapid acceleration in the earlier part of the year. “Housing definitely came back to earth over the second half of 2014, and we welcome and expect to see more of the same as we look ahead at 2015,” said Stan Humphries, Zillow’schief economist, of Tuesday’s numbers. “A slower-moving housing market is inherently more stable, more balanced between buyers and sellers and more sustainable over the long-term. As we prepare for New Years and the next home shopping season, we expect soaring rents to entice more people to the relative stability of homeownership, particularly younger potential buyers.

Utilities, 2014’s best sector performer, led the decline with a drop of 2.1 percent. ● U.S. renters paid $441 billion for apartments and houses this year, a $20.6 billion increase, as fewer Americans owned their homes and landlords with tight inventories raised leasing charges, the online real estate listings firm Zillow said Tuesday. In the New York metropolitan area, the largest U.S. housing market, the number of rental residences expanded by 63,000 to 3.4 million, with tenants spending $50 billion for shelter. Demand for rentals has grown, with owners of more than 5 million U.S. homes going through foreclosure since 2007, mortgage lending tightening and younger families postponing buying because they cannot afford or prefer not to own property. That may change slowly as rents rise and the economy improves, said Skylar Olsen, senior economist at Zillow. ● The Centers for Medicare and Medicaid Services, which oversees the enrollment Web site for the Affordable Care Act, has awarded Dublin-based Accenture a five-year contract extension, worth about $564 million, to continue running HealthCare.gov, according to federal records. ● A federal appeals court has sided with juice maker Pom Wonderful in a lawsuit over another beverage company’s use of the term “pom.” The U.S. Circuit Court of Appeals for the 9th Circuit on Tuesday reversed a lower court ruling that denied Pom Wonderful’s request for a preliminary injunction against Portland, Ore.-based Pur Beverages.

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