Home-price gains in 20 U.S. cities grew in September at the slowest pace in almost two years, adding to signs that buyer interest is waning amid higher mortgage rates and elevated property values.
The 20-city index of property values increased 5.1 per cent from a year earlier, the least since November 2016, after rising 5.5 per cent in the prior month, according to S&P CoreLogic Case-Shiller data released Tuesday. The median estimate in a Bloomberg survey of economists called for a gain of 5.2 per cent. Nationally, home prices were up 5.5 per cent from September 2017.
- The report marks the sixth straight deceleration in price gains. It’s the latest in a spate of reports indicating housing is in a broad slowdown, with sales and home-building also showing signs of weakness.
- While the 0.3 per cent monthly increase in the seasonally adjusted 20-city index was slightly above projections for 0.2 per cent, economists look at the year-over-year gauge for a better indication of trends.
- The results also indicate more prospective buyers may be able to enter the market in coming months, though property values remain elevated, mortgage rates are near an eight-year high and the supply of affordable properties is still limited.
- The respite on price appreciation may be especially attractive for younger buyers or those purchasing a house for the first time; on the flip side, softer price gains also mean smaller advances in equity for owners.
- “Home prices plus data on house sales and construction confirm the slowdown in housing,” David Blitzer, chairman of the S&P index committee, said in a statement.
- All 20 cities in the index showed year-over-year gains, led by a 13.5 per cent increase in Las Vegas and 9.9 per cent in San Francisco.
- Prices in Seattle fell 0.3 per cent from the prior month; annual gains have slowed to 8.4 per cent from double digits earlier this year. San Diego was the only other city to record a monthly drop, at 0.1 per cent.
- New York, hit by new federal limits on mortgage and property-tax deductions, had the weakest annual price gain at 2.6 per cent, while Washington was second-lowest at 2.9 per cent.