Home price growth continued to struggle in November, with Case-Shiller’s 20-City Home Price Index moving from October’s reading of 5.30 percent annual growth to 5.20 percent growth in November. This was the lowest reading since January 2015.
Las Vegas, Nevada remained first in home price growth rate with a year-over-year home prices growth of 12 percent. Phoenix, Arizona’s year-over-year home price growth rate was 8.10 percent and Seattle, Washington held third place with a year-over-year home price growth rate of 6.30 percent.
Las Vegas’ large year-over-year growth in home prices was attributed to the city’s ongoing recovery from the recession when home prices tanked in southern Nevada. Cities including Denver, Colorado, San Francisco California and Seattle, Washington saw steep declines in home price growth rates as compared to past peak home price growth fueled by post-recession recovery.
Challenges to home price appreciation were no surprise as slim supplies of available homes and high buyer demand created buyer competition and fewer choices of available homes. Affordability continued to discourage first-time and moderate income buyers.
David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices said, “The pace of price increases is being dampened by declining sales of existing homes and weaker affordability. Sales peaked in November 2017 and have drifted down through 2018. Affordability reflects higher prices and increased mortgage rates through much of last year.”
Affordable Homes Hard To Find Amid Slim Supply
First-time home buyers accounted for about 32 percent of home sales in November; their market share has not increased in recent months. First-time buyers typically look for pre-owned homes that cost less than brand new homes.
Healthy job growth and record unemployment rates could encourage potential buyers, but buyers were sidelined by short supplies of available homes and concerns about mortgage rates and overall economic trends. Analysts said that recently falling mortgage rates may not have been enough to encourage buyers who continued to face high demand for fewer homes and strict criteria for mortgage approval.
Positive indicators for housing markets included stable inflation and the Fed’s decision not to rise its target interest rate range; this was expected to help slow rate increases on consumer credit including mortgage loans.
If you are in the market for a new home, please be sure to consult with your trusted real estate agent and your trusted home mortgage professional.