Robust US home price gains cool slightly in April

Gladys Abbott
June 27, 2017

As home prices continue rising faster than inflation, two questions are being asked: why?

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index's 10-City Composite rose 4.9 percent year-over-year, down from a 5.2 percent gain in March, while its 20-City Composite rose 5.7 percent, down from a 5.9 percent gain in March.

Condo prices in the Chicago area did a bit better on a year over year basis with a 4.4% gain, but that's also the lowest gain in 5 months.

David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said the April increase in prices shows demand for homes is rising but the supply of homes has hardly kept up.

The ever-climbing prices come as buyers are competing over a slim supply of homes on the market.

David M. Blitzer, chairman of the index committee at S&P, said in a statement that he's not anxious about another national housing downturn, citing low levels of household debt and mortgage default rates.

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Seattle, Portland, Oregon, and Dallas reported the highest year-over-year gains in April.

The National Association of Realtors reported last week that the inventory of existing homes available for sale rose in May by 2.1 percent to 1.96 million from the previous month. "For the moment, conditions appear favorable for avoiding a crash".

The increases follow a nationwide trend of rapidly rising home prices.

He said increased construction, a low rate of mortgage defaults and manageable household debt should prevent a crash.

Secondary tech hubs like Seattle, Portland and Dallas reported the highest annual gains among the 20 metropolitan areas measured by the index. Total mortgage debt outstanding is $14.4 trillion, about $400 billion below the record set in 2008. On a non-seasonally adjusted basis, prices increased 0.9 percent from March. "While prices can not rise indefinitely, there is no way to tell when rising prices and mortgage rates will force a slowdown in housing".

The Case-Shiller report, based on repeat sales of single-family homes, is just one of many ways to measure the housing market's health.

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