When S&P Dow Jones Indices released the latest data for the S&P/Case-Shiller Home Price Indices earlier this week, it was a mix of good news and bad news for homeowners looking to sell in the second half of 2014. As of August 2014, average home prices across the United States are back to their spring 2005 levels. And August marked 8 straight months of housing price gains, albeit at a steadily decreasing rate. Very few markets still show double-digit growth in home prices.
The U.S. National Home Price Index and both the 10-City and 20-City Composites climbed just 0.2% on a monthly basis (not seasonally adjusted) from July to August 2014. Year-over-year prices for the national index increased 5.1% in August, while home prices grew 5.5% year-over-year for the 10-City Composite and 5.6% for the 20-City Composite.
Of the 20 markets analyzed, prices are still rising on a year-over-year basis in all of them, but 19 of them the pace of that growth decline throughout 2014. Only Cleveland’s prices continued to rise at an increased clip. Only two cities, Las Vegas and Miami, saw growth above 10%.
The slowdown comes with some good signs in the market. Interest rates remain low, and the unemployment rate continues to drop. While prices may not be increasing as quickly as those trying to sell a home (especially with negative equity) might prefer, they are still on the rise. The slowdown in price growth is really just bringing appreciation back to a more sustainable level of growth. Incomes have not been increasing enough to keep pace with the previous growth rate.
With prices still moving up, investors are buying less, leaving more homes available for first-time buyers and those looking to buy a larger home. That is welcome news, as home ownership is now at its lowest point in 19 years at 64.4%. If prices continue to slow heading into the winter, and it looks like interest rates will remain low for the foreseeable future, the time could be right for those who have been waiting to buy a home to jump into the market.
How do you expect the market to act in the coming months? Do you expect the slowdown to continue? Do you think that’s a cause for concern or relief? Let us know in the comments below.