Robust US home price gains cool slightly in April

Wade Massey
June 28, 2017

A national housing index released Tuesday showed home price increases are slowing across South Florida, and that's exactly what the market needs, industry observers say.

Meanwhile, the national home price NSA index covering all nine USA census divisions saw a 5.5% annual gain, down from 5.6% in March. While the rate of price increases missed the 0.6% median economic forecast, it still set records for a 5th consecutive month.

"Since demand is exceeding supply and financing is available, there is nothing right now to keep prices from going up", said S&P Dow Jones Indices managing director and chairman of the index committee David M. Blitzer in a statement.

The indices were created by taking the price of housing in the nation's biggest cities in January 2000, assigning them a value of 100, and tracking their subsequent rise and fall. The 10-City Composite annual increase came in at 4.9 percent, lower than the 5.2 percent level in the previous month, and the 20-City Composite posted a 5.7 percent year-over-year gain, which was below the 5.9 percent level set in March. Analysts were expecting an increase of 5.9 percent for the month, according to Thomson Reuters consensus estimates.

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Seven cities reported greater price increases in the year ending April 2017 versus the year ending March 2017.

Delving into details, out of 20 cities covered in the report, 15 recorded positive monthly home price growth. The title company First American Corp. reported that real home prices actually declined by 1.6 percent in April because mortgage rates dropped slightly. Portland's home prices are the second fastest-growing in the country, with year-over-year gains of 9.3 percent in April.

"High demand from home buyers and a limited supply of homes for sale are the main ingredients in the recipe for rising home prices". "While prices can not rise indefinitely, there is no way to tell when rising prices and mortgage rates will force a slowdown in housing". Housing starts are increasing, foreclosure levels are low and household debt levels are manageable.

Home prices continue their steady rise in San Diego, but at less than the blistering pace of some metropolitan areas in the Pacific Northwest, amid talk of possible bubble conditions nationally. Rather, will home price gains gently slow or will they crash and take the economy down with them?

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