Home prices continued their upward climb in March but did so at much slower pace than usual for the second consecutive month, leading industry experts to believe that the market is beginning to stabilize.
The S&P/Case-Shiller U.S. National Home Price Index (HPI), that covers all nine U.S. census divisions, reported a 5.2 percent increase in home prices year-over-year in March, down from 5.3 percent the previous month. Month-over-month, home prices rose 0.7 percent, slightly higher than the previous month's 0.2 percent gain.
According to the HPI, the 10-City Composite and the 20-City Composite year-over-year gains were both unchanged from the previous month at 4.7 percent and 5.4 percent, respectively. Month-over-month, the 10-City Composite recorded a 0.8 percent month-over-month increase, while the 20-City Composite posted a 0.9 percent increase in March.
"Home prices are continuing to rise at a 5 percent annual rate, a pace that has held since the start of 2015,” said David M. Blitzer, Managing Director & Chairman of the Index Committee at S&P Dow Jones Indices. “The economy is supporting the price increases with improving labor markets, falling unemployment rates and extremely low mortgage rates. Another factor behind rising home prices is the limited supply of homes on the market. The number of homes currently on the market is less than two percent of the number of households in the U.S., the lowest percentage seen since the mid- 1980s."
Trulia's Chief Economist Ralph McLaughlin noted that the Case-Shiller HPI results are "a sign that the US housing market is stabilizing in the wake of strong price appreciation between 2012 and 2014. While the S&P/Case-Shiller National Home Price Index is an important metric to watch, it’s worth noting that the measure is more reflective of price movements in premium homes rather than middle or lower tier homes."
According to the data, the top five cities with the highest year-over-year gains among the 20 cities with another month of annual price increases were Portland (12.3 percent), Seattle (10.8 percent), Denver (10.0 percent), San Francisco (8.5 percent), and Dallas (8.5 percent).
“Price movements vary across the country. The Pacific Northwest and the west continue to be the strongest regions. Seattle, Portland, Oregon and Denver had the largest year-over-year price increases,"Blitzer stated. "These cities also saw some of the largest declines in unemployment rates among the 20 cities included in the S&P/Case-Shiller Indices. The northeast and upper mid-west regions were at the other end of the ranking. The four cities with the smallest year-over-year prices gains were Washington D.C., Chicago, New York, and Cleveland. The unemployment rates in Chicago and Cleveland rose from March 2015 to March 2016.”
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