Home Price Appreciation Likely to Moderate

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10 · 31 · 17

National home prices continued to make gains, but the pace of appreciation is likely to moderate. While the biggest gains had been concentrated in the Northwest, other high-growth areas are emerging.

The Case-Shiller
20-City Composite Home Price Index
, a measure of U.S. home prices based on a value-weighted average in 20 metropolitan areas, was 202.87 as of August.

Compared to one month earlier, the index moved up by 0.4 percent,
while it has ascended 5.9 percent versus the same month a year earlier.

Data from
S&P Dow Jones Indices and CoreLogic Inc., which reported the 20-city HPI Tuesday, indicate the index has increased 51 percent from the low in March 2012 and is just 2 percent shy of the July 2006 peak.

“Home prices will not rise forever,” David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, cautioned in the report. “Measures of affordability are beginning to slide, indicating that the pool of buyers is shrinking. The Federal Reserve is pushing short-term interest rates upward and mortgage rates are likely to follow over time, removing a key factor supporting rising home prices.”

Over the past year, home prices have soared 13.2 percent in Seattle, making it the most appreciating MSA of the 20 tracked. Las Vegas saw an 8.6 percent rise, while prices were up 7.8 percent in San Diego and 7.2 percent in Denver, Detroit and Portland.

Prices in the Washington, D.C., MSA have inched up just 3.4 percent,
the least of any area.

The seasonally adjusted HPI from the Federal Housing Finance Agency
was calculated to be 251.8 during the most-recent month, up 0.7 percent from July and climbing 6.6 percent from August 2016.

FHFA’s report indicated that
home prices have soared 9.3 percent on a year-over-year basis in the Pacific, giving it the biggest gain of any region. The Mountain region increased 8.3 percent, and the South Atlantic was up 6.7 percent.

With just a 5.0 percent gain from a year prior, Middle Atlantic prices had the weakest gain.

U.S. home prices averaged $282,000, according to the Black Knight
HPI Report August 2017
— the highest it’s ever been. The index crept up 0.24 percent from a month earlier, climbed 6.24 percent from a year earlier and stands 41.53 percent above its January 2012 low.

Compared to July, prices jumped 1.58 percent in New York — the most of any state. Prices in Nevada were up 1.04 percent, while they rose 1.03 percent in Vermont, 0.85 percent in New Hampshire and 0.72 percent in New Jersey.

With an 0.26 percent decrease from August 2016, North Dakota fared worst.

A report earlier this month from CoreLogic Inc. said national home prices moved up 0.9 percent between July and August of this year and 6.9 percent from August of last year.

CoreLogic estimates that prices moved up only 0.1 percent in September. Expected year-over-year gains are also less — with a 4.7 percent rise predicted between August 2017 and August 2018.


Mortgage Daily Staff


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