The home prices of 20 large metro markets measured by Case-Shiller increased 6.7 percent over the past 12 months to July. However, there is a marked deceleration in the price growth. Price gains were in the double-digits for most of 2013 and as recently as April of this year. Increased inventory and lower home sales are factors slowing home price appreciation.
Las Vegas, Miami, and San Francisco are the only markets to experience double-digit price appreciation in the past 12 months. At the other end, prices have slowed to less than 4 percent in Charlotte, Chicago, Cleveland, New York, and Washington, D.C.
All markets are in a recovery mode of trying to get back to the prior peak, except for two. Dallas and Denver have blasted through the past peak prices and are still appreciating at a good 7 percent from one year before.
Case-Shiller methodology is such that price appreciation has been stronger compared to other price measurements. But given the prominence of the professors, with the latter winning the Nobel Prize in economics, its price data gets heavily talked about. For comparison, the NAR median price rose 4.8 percent to August and FHFA repeat price index rose 4.4 percent to July.
What is the outlook? At this week’s meeting of the National Association of Business Economists, there was an unusual consensus among the panel of housing economists on this topic, for which this author moderated. Home prices are projected to rise at around 4 percent in 2015 according to Ken Simonson, Ivy Zelman, David Crowe, and Lawrence Yun.
This author further believes that prices will likely rise a bit faster in the next five years in states where Californians move and retire to. That is, the western states of Oregon, Washington, Utah, and Colorado will experience a better price growth because the Californians will sell their expensive homes (after having paid off their mortgages) and therefore can easily bid-up home prices in the new states. Anecdotal observations say many REALTORS® who help buyers from California are delighted with the cash they bring, though not necessarily with new residents’ personalities.
Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.