Inman News

29 July 2015

The recently released S&P/Case-Shiller U.S. National Home Price Index (HPI) points to a U.S. housing market that is seeing more consistency in terms of home price gains.

Spanning May 2014 to May 2015, U.S. homes rose in value by 4.4 percent overall. In April, values rose by 4.3 percent on a year-to-year basis.

“This lack of monthly growth indicates a more sustainable housing recovery and a balance between buyers and sellers,” commented Selma Hepp, chief economist at Trulia.

Hepp stated that an overall slower pace of growth is good news for potential home-buyers, especially those previously discouraged by rapid price increases and bidding wars.

On the other hand, home price slowdowns may influence some home sellers to avoid listing their homes.

HPI’s 20-city composite — which eyes the most populated cities in the nation — gained 4.9 percent year over year.

Ten markets in the 20-city composite saw 12-month growth that exceeded 5 percent. Denver led the way with a 10 percent increase, followed by San Francisco and Dallas, which saw gains of 9.7 percent and 8.4 percent, respectively.

Other top-performing cities included:

• Miami (8 percent)
• Portland (7.4 percent)
• Seattle (7.4 percent)
• Las Vegas (6.7 percent)
• Tampa (6.4 percent)
• Los Angeles (6.1 percent)
• Atlanta (5.1 percent)

Two other improving markets cited by the index were New York and Phoenix. Both cities have reported six consecutive months of increases in their year-over-year returns.

In New York, these returns have increased from 1.3 percent in November 2014 to 3 percent in May. In Phoenix, they climbed from 2 percent to 3.8 percent during the same period.

On a year-to-year basis, the poorest-performing cities were Washington, D.C., and Cleveland. These markets saw 12-month rises of only 1.3 percent and 1.6 percent, respectively.

“Over the next two years or so, the rate of (overall) home price increases is more likely to slow than to accelerate,” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.

Blitzer points to prices, which are increasing about twice as fast as inflation or wages, as one reason for this slowdown.

“Moreover, other housing measures are less robust,” he said, pointing to single-family housing starts, new-home sales volume and first-time home-buying activity.

“Without a boost in first-timers, there is less housing market activity, fewer existing homes being put on the market, and more worry about inventory.”