CoreLogic forecasts that home price appreciation will decelerate starting in 2014, ‘as rising home prices and mortgage interest rates erode affordability and demand and supply become more balanced.’
In its analysis of the data derived from the CoreLogic Case-Shiller Indices for the first quarter, the firm predicts that ‘as more homeowners consider selling their homes to lock in capital gains, including many who had negative equity until the recent surge in home values, upward pressure on prices will subside.’
The analysis is based on home price trends in more than 380 U.S. markets. To arrive at its conclusions, CoreLogic combined data from the Case-Shiller Index with data provided by the Federal Housing Finance Agency.
The firm points out that its quarterly report differs from the S&P/Dow Jones Case-Shiller monthly report, as it includes local-level data for a greater number of markets over a different time frame.
As reported on MortgageOrb yesterday, the Case-Shiller Indices estimate that home prices increased by 10.2% in the first quarter of 2013, compared to the first quarter of 2012, the first double-digit gain since the peak of the housing bubble seven years ago.
Home prices were up in more than three quarters of metropolitan areas in the first quarter, year over year, according to the report.
‘Record levels of affordability, a slowly improving job market, and very small inventories of new and existing homes for sale will continue to drive U.S. home price appreciation during the summer,’ says Dr. David Stiff, chief economist for CoreLogic Case-Shiller. ‘Although a small number of metropolitan areas show year-over-year declines, it is likely that home prices in these cities will turn positive by the end of the year.’
Metro areas that were hard-hit by the housing crisis but which rebounded in the first quarter include Phoenix (+23%), Sacramento (+21%), Detroit (+18%) and Miami (+14%). CoreLogic points out that extremely limited inventories in these markets helped contribute to increased prices.
Three of the metros that experienced a small year-over-year home price decline include Long Island, N.Y. (-1%); Waukegan-Kenosha, Ill.-Wis. (-2%); and Poughkeepsie, N.Y. (-4%).
‘Although double-digit gains usually indicate unsustainable appreciation and, possibly, bubbles in some metro areas, there is less need for concern now since home prices remain 26 percent below their peak nationally and are even lower in many metro markets,’ says Dr. Stiff.
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