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In August, home-price growth slowed down, heaving back the annual pace among 20 major U.S. cities. It appeared to be the slowest rate in the past two years as per the data released Tuesday.
According to the S&P/Case-Shiller’s 20-city composite index released Tuesday, in August, the US home prices bumped up 0.2%, slower than the 0.6% rise in July. Amongst 20 followed cities, 3 saw prices fall, though Detroit posted the fastest growth.
In the meanwhile, annual growth slowed down, amid year-over-year home prices rising 5.6% in August, which is believed to be the slowest pace since November 2012 – compared to the annual growth of 6.7% in July.
Certainly, the sellers don’t like it when the prices slowed down, though the trend could entice buyers. Since November, the annual price appreciation in the residential market has tapered because more sellers have put their homes on the market. Additionally, increased mortgage rates and a rough winter hit sales earlier this year.
Millan Mulraine, deputy head of U.S. research and strategy at TD Securities, wrote in a research note “This report underscores the weak tone in housing market activity in recent months and the steady decline in prices is symptomatic of the erosion in housing demand.”
If the economy continues to add jobs at a strong pace, the sales rate could get a boost. Moreover, mortgage rates dropped recently, a trend that could entice buyers, however the hot spring and summer sales markets are over for 2014.
Stan Humphries, chief economist at real estate site Zillow said, “We are transitioning away from a period of hot and bothered market activity, characterized by lower inventory and rapid price growth, onto a more slow and steady trajectory, which is great news. As appreciation cools and more inventory come on line, buyers will start to gain a more competitive advantage, after years of sellers being in the driver’s seat.”
Since April, annual home-price growth hasn’t been in the double digits. Though it’s worth noting that in spite of slower growth, housing appreciation is still outpacing broad U.S. consumer inflation. Home prices that keep rising too quickly will become unaffordable for an increasingly large population.
After seasonal adjustments, home prices among the 20 cities declined by 0.1% in August, the strongest result in 4 months — compared with a 0.5% decline in July.
During August, home prices were declined by 16% from a 2006 peak.