Home Price Appreciation Continues To Slow Nationwide

Posted by Patrick Barnard on June 24, 2014 No Comments
Categories : Residential Mortgage

Home price appreciation continued to slow in April, rising just 1.1% compared to March, according to the S&P/Case-Shiller Home Price Index (HPI). That could spell bad news for underwater homeowners looking to move into positive equity – and good news for prospective home buyers looking for deals.

On a year-over-year basis, home prices were up 10.8%, as of April, according to the report's 20-city composite. However, most of that growth came in 2013 – the first four months of this year saw only modest gains in home price appreciation. Home prices increased only 0.2%, nationwide, in the first quarter, compared to the fourth quarter of 2013.

Nineteen of the 20 cities tracked saw lower annual gains in April than in March, according to the report. California (including Los Angeles, San Diego and San Francisco) saw prices dip by approximately three percentage points. Boston, which saw home prices rise 2.9% – its largest monthly gain in more than 27 years – was the only city to see its annual rate improve in April. San Francisco rose 2.3% – its sixth consecutive year-over-year price increase.

‘Although home prices rose in April, the annual gains weakened,’ says David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. ‘Overall, prices are rising month to month but at a slower rate. Last year, some Sunbelt cities were seeing year-over-year numbers close to 30 percent; now, all are below 20 percent.’

But as to be expected, the rate of appreciation varies greatly from city to city. For example, five cities – Atlanta, Boston, Chicago, San Francisco and Seattle – reported monthly gains of 2% or more. Dallas and Denver gained 1.6% and continue to set new peaks. Boston and Charlotte, N.C., are less than 10% away from their peaks, according to the report.

Blitzer points out that while near-term economic factors are favorable for gains in housing – for example, mortgage rates are expected to remain historically low for the remainder of this year – the market ‘is not back to normal: prices are being supported by cash sales, low inventories, and declining foreclosure and REO sales.’

‘First-time home buyers are not back in force, and qualifying for a mortgage remains challenging,’ he adds. ‘The question is whether housing will bounce back before the Fed begins to tighten sometime next year.’

To view the full S&P/Case-Shiller HPI report, click here.

Meanwhile, the Federal Housing Finance Agency's (FHFA) monthly HPI, which uses a different methodology and tracks only loans passing through Fannie Mae and Freddie Mac, shows no change (0.0%) in U.S. house prices in April compared to March. The FHFA reported last month that home prices increased 0.7% in March compared to February.

On a year-over-year basis, U.S. home prices were up 5.9% compared to April 2013. However, prices are still 6.9% below their April 2007 peak, according to the FHFA.

Looking at the nine census divisions tracked in the FHFA report, the New England division saw home prices drop 1.3%, month over month, while the East South Central division saw prices increase 0.6%. This, again, indicates the spotty nature of the recovery.

On a year-over-year basis, all nine divisions posted positive returns, ranging from 1.7% in the Middle Atlantic division to 10.7% in the Pacific division.

In addition, Black Knight Financial Services recently released its HPI report, showing that U.S. home prices rose 0.9% in April compared to March – and were up 6.4% compared to April 2013. That report also shows that home price appreciation is slowing nationwide.

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