U.S. home price growth slows for third consecutive month
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Home price growth in the United States slowed for the third consecutive month.
Standard & Poor’s said on Tuesday that its national S&P CoreLogic Case-Shiller home price index posted an annual gain of 19.1% in October, down 19.7% from September. The 20-City Composite posted an annual gain of 18.4%, down from 19.1% a month earlier. 20-City’s results come very close to analysts’ expectations of an 18.5% annual gain, according to Bloomberg consensus estimates.
âIn October 2021, US home prices rose dramatically, but at a decelerating rate,â said Craig J. Lazzara, managing director and global head of index investment strategy at S&P DJI. âAll 20 cities saw price increases in the year ending October 2021. October’s increase ranked in the top quintile of historical experience for 19 cities and in the top decile for 17 of them. As was the case last month, however, in 14 of the 20 cities prices have slowed down, meaning that they rose less in October than they did in September.
Despite the slowing pace of growth, October’s reading was the fourth-highest reading in 34 years of national index data, according to Lazzara. The first three were the three months immediately preceding October. Historically low inventories, low interest rates and pent-up demand due to the COVID-19 pandemic have pushed home prices up.
âSince the start of the pandemic, house prices in the United States have been inflated by historically low interest rates, supply restrictions that included a moratorium on foreclosure and increased savings for a down payment due to limited options for discretionary spending, âZillow Senior Economist Kwame Donaldson said in a statement. âHouse price growth is slowing now because many of this support has expired or is declining. But other supports remain: the U.S. labor market claims low unemployment and strong wage growth, a tsunami of millennials reaching prime age for first-time homebuyers, and inventory for sale unexpectedly tightened in October and November. “
Phoenix once again led the 20-City Composite with an annual gain of 32.3%. Tampa and Miami followed with an annual increase of 28.1% and 25.7%, respectively.
âHome prices continue to appreciate at double-digit rates – two to three times faster than a year ago – in all metropolitan areas reported by the CoreLogic S&P Case Shiller Index,â said Selma Hepp, deputy chief economist at CoreLogic, in a statement ahead of earnings. âUnfortunately, the rate of home price growth will be limiting for many young buyers who have yet to accumulate enough equity gains, and an expected increase in mortgage rates next year will present other challenges. Together, these two factors will limit the continued acceleration in home prices. “
Last week, the National Association of Realtors said the median price of existing homes for all housing types in November was $ 353,900, up 13.9% from November 2020 ($ 310,800), as prices rose in the United States, further indicating that prices are still heading north.
Soaring prices have been bad news for first-time homebuyers in particular. In November, the share of first-time buyers fell to 26%, from 32% a year ago, according to the NAR.
But according to a new survey from Realtor.com, first-time homebuyers are bullish as stocks are expected to rise early in the new year. Seventy-two percent of first-time home buyers plan to make a purchase in 2022.
âFaced with competitive market dynamics, our recent survey shows first-time homebuyers are adjusting with 9 out of 10 planning to employ some sort of tactic to navigate the competition, down from just 8 out of 10 in our previous one. last spring’s poll, “Danielle Hale, chief economist for Realtor.com, said in a statement ahead of the results.
Amanda Fung is a writer at Yahoo Finance.
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