Home-price gains in 20 U.S. cities decelerated in March for a 12th straight month, suggesting sellers have yet to fully adjust to buyers’ demands for affordable properties.

The S&P CoreLogic Case-Shiller index of property values increased 2.7 per cent from a year earlier, the slowest since August 2012, data showed Tuesday. That was slightly above estimates though the monthly gain of 0.1 per cent missed all analyst forecasts. Nationally, home-price gains slowed to a 3.7 per cent pace.

Key Insights

-Sellers are still struggling to attract buyers in some areas despite lower mortgage rates and more-sustained wage gains, with prices rising at less than half the pace of a year ago. Further weakness would suggest residential investment could drag down economic growth for yet another quarter, though eventually more attractive prices should help the market recover.

-Other data on housing have been soft or mixed. A government report last week showed the median price for a new U.S. home increased in April to the highest level since December 2017 while sales eased from the prior month. Existing-home sales, which make up the majority of the U.S. housing market, unexpectedly fell in April while single-family housing permits fell to the lowest level in almost two years.

Official’s View

“Given the broader economic picture, housing should be doing better,” David Blitzer, chairman of the S&P index committee, said in a statement. “Measures of household debt service do not reveal any problems and consumer sentiment surveys are upbeat. The difficulty facing housing may be too-high price increases,” which continue to outpace inflation, he said.

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-While all 20 cities in the index showed year-over-year gains, five were below two per cent: Chicago, Los Angeles, San Diego, San Francisco and Seattle, which a year ago posted a 13 per cent increase. Las Vegas led the nation in March with an 8.2 per cent gain, followed by Phoenix.

-Prices in 14 cities rose from the prior month on a seasonally adjusted basis, while three were down and three were unchanged.