United States: Home prices increase in April but overall annual trend continues to slow
May 27, 2014
In April, the unadjusted S&P/Case-Shiller 20-city home price composite index increased 1.2% over the previous month. The reading overshot market expectations of a 0.8% rise and was up from the 0.9% reading registered in the previous month.
On an annual basis, home prices rose 10.8% over the same month of last year, which was down from the 12.4% rise recorded in March. However, S&P emphasized that, while housing prices continue to rise, the overall pace is slowing; annual price increases moderated in 19 of the 20 cities surveyed. Moreover, despite the strong performance in recent months, prices still remain 18.1% below the July 2006 peak.
According to S&P, “near term economic factors favor further gains in housing: mortgage rates are lower than a year ago, the Fed is expected to keep interest rates steady until mid-2015 and the labor market is improving. However, housing is not back to normal. First time home buyers are not back in force and qualifying for a mortgage remains challenging. The question is whether housing will bounce back before the Fed begins to tighten sometime next year.”
Author: Carl Kelly, Economist