HOUSE PRICES RISE AGAIN, BUT THE PACE COULD SLOW
c.2014 New York Times News Service
WASHINGTON — It was a great year for the stock market. And it was also a pretty good year for many people’s biggest investment: their homes.
In 2013’s last glimpse at the housing market, figures released Tuesday showed that home prices in major metro areas kept rising in October. Year-over-year, prices were up 13.6 percent, the biggest gain in seven years.
After plummeting during the housing bust, prices have increased steadily since the spring of 2012. But while prices in 20 major American metro areas increased 0.2 percent in October, without seasonal adjustment, the quick rebound in prices is slowing, according to the closely watched S&P/Case-Shiller data. Higher mortgage rates might slow the pace of improvement going forward, analysts say.
Nationally, the increase in home prices has moderated, the S&P/Case-Shiller analysis said. Prices decreased in nine metro areas between September and October, including Denver, Chicago and Washington, whereas just one saw price decreases between August and September.
“Monthly numbers show we are living on borrowed time and the boom is fading,” said David M. Blitzer of S&P Dow Jones Indices in an analysis of the new housing numbers. A big question, he said, is how quickly the Federal Reserve pulls back from its extraordinary efforts to keep rates low.
“The key economic question facing housing is the Fed’s future course to scale back quantitative easing and how this will affect mortgage rates,” Blitzer said. “Other housing data paint a mixed picture suggesting that we may be close to the peak gains in prices.” He added: “Most forecasts for home prices point to single-digit growth in 2014.”
In many metro areas where prices declined sharply — particularly those encompassing Sun Belt and Rust Belt cities like Phoenix, Las Vegas and Detroit — similarly sharp rebounds followed. But generally, prices have not touched their pre-bust heights, with prices across the country remaining about 10 to 40 percent lower, the S&P/Case-Shiller data show. In Dallas and Denver, however, prices have hit new peaks, the report said.
Many economists expect price increases to moderate next year, with higher prices and higher mortgage costs making homes less affordable, even though the labor market recovery might pick up some steam and inventory might increase in some areas.