Economic Report: Annual home-price growth slowest in two years

WASHINGTON (MarketWatch) — U.S. home prices were just about unchanged in September, as annual growth cooled to the slowest year-over-year pace in two years, moving the market closer to sustainable gains, according to data released Tuesday.

A gauge of home prices in 20 cities ticked down .03% in September, as the summer sales market wrapped up, following an increase of 0.2% in August, S&P/Case-Shiller reported. It’s typical to see unadjusted home prices slow in September — purchases drop off as the new school year gets underway.

Among 20 tracked cities, September housing prices fell in nine, rose in nine, and were unchanged in the remaining two.

After seasonal adjustments, home prices among the 20 cities rose 0.3% in September — the strongest result in six months — compared with a 0.1% decline August.

Meanwhile, annual growth slowed down, with year-over-year home prices rising 4.9% in September — the slowest pace since October 2012 — compared with annual growth of 5.6% in August. Economists polled by Dow Jones Newswires had expected year-over-year price growth to slow to 4.8% in September.

These results echoed separate housing data released earlier this month that showed September hitting the slowest annual appreciations in two years.

Annual home-price growth hasn’t been in the double digits since April, and slower appreciation may lure buyers. Through September home prices were about 16% below a 2006 peak, according to S&P/Case-Shiller.

Price growth has slowed down as the number of homes for sale increased over the past year.

Weaker price growth comes with positive and negative effects. On the plus side: Slower growth may encourage more buyers to jump into the market. Demand was hit earlier this year by a combination of accelerating prices and mortgage rates, among other factors. Now that appreciation is slowing, and mortgage rates are low, prospective buyers may see an opportunity.

On the negative side: It will take longer for equity to rise for owners, including those who are underwater (homeowners who owe more on a mortgage than the home is worth) and struggling with their payments.

If the U.S. economy continues to add jobs at a healthy and consistent pace, a strengthening labor market that drives demand should support a healthy pace of housing inflation.

Elsewhere Tuesday, a separate housing gauge from the Federal Housing Finance Agency, which regulates mortgage buyers Fannie Mae FNMA, -1.20%  and Freddie Mac FMCC, -0.83%  , reported that seasonally adjusted prices were unchanged in September, and up 4.3% from the year-earlier period.

“Price increases were relatively small in most areas, however, and are consistent with the type of market deceleration that other housing market statistics have shown in recent periods,” said Andrew Leventis, principal economist at FHFA. – Top Stories

Pin It

Comments are closed.