MW: Home-price growth posts sharp slowdown in April
WASHINGTON (MarketWatch) — Home prices rose in April as the spring selling season got underway, even as annual growth skidded, dropping to the slowest year-over-year pace in more than a year, according to data released Tuesday morning.
S&P/Case-Shiller’s price barometer tracking 20 cities showed that year-over-year price growth hit 10.8% in April — a fast pace but down sharply from annual growth of 12.4% in March and a recent peak of 13.7% in November.
“House-price inflation is easing to more sustainable levels,” Andrew Grantham, an economist at CIBC World Markets, wrote in a research note.
Limited inventories have been exerting upward pressure on prices over the past year. But a tough winter, as well as expanding inventories and dropping affordability, are all putting a damper on California’s ultra-hot markets and elsewhere. Among the 20 cities, 19 saw annual growth taper in April.
Also Tuesday, Case-Shiller reported that its monthly gauge of home prices rose 1.1% in April, a second consecutive gain as the spring selling season got underway, with all 20 tracked cities posting higher prices. After seasonal adjustments, home prices among the 20 cities rose 0.2% in April, compared with 1.2% in March.
Elsewhere Tuesday, the Federal Housing Finance Agency, which tracks deals involving mortgages backed by Fannie Mae FNMA -1.79% and Freddie Mac FMCC -1.82% , reported that home prices were unchanged in April , while annual growth hit 5.9%.
Although homeowners don’t love slowing appreciation, cooler price growth may encourage more buyers to enter the market. Looking forward, economists expect home prices to continue to slow down as inventories expand. A report on Monday showed that the number of existing homes on the market rose last month to the highest level in almost two years.
The housing market’s weak first quarter is likely to ding the annual sales tally for 2014, dragging it below last year’s result. Officials are concerned that the market remains slow, and had expected going low interest rates to spur demand. On Monday, a senior Treasury official said that the U.S. needs to see housing and construction bounce back more for the country to break through to the next level of the recovery.
