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Home prices in March continued upward climb

U.S. home-price trends changed little in March, as prices continued to run solidly above the level a year earlier, according to the S&P/Case-Shiller Home Price Indices.

Overall home prices were up 5.2 percent year over year in March, which was down slightly from the 5.3 percent year-over-year growth rate recorded the prior month. The year-over-year growth rates for the 10-city and 20-city composite indices in March of this year were at 4.7 percent and 5.4 percent, respectively, Case-Shiller reported. Those rates are in line with annual growth rates notched in February. 

Portland saw the highest annual growth in home prices this past March, at 12.3 percent, followed by Seattle at 10.8 percent and Denver at 10 percent. The smallest year-over-year prices gains were in the cities of Washington, Chicago, New York, and Cleveland.

“Home prices are continuing to rise at a 5 percent annual rate, a pace that has held since the start of 2015,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, in a news release.

National Association of Realtors Chief Economist Lawrence Yun said home price gains haven't slowed down that much because of  "a widespread housing shortage in much of the country."

Yun said he was not ready to declare "price bubbles" in some markets, however, noting that the big price gains in technology hubs like San Francisco and San Jose have come where job gains have been the strongest.  

"As long as high-technology jobs are being created, then the San Francisco-San Jose region, the prices can hold on," Yun told Scotsman Guide News. "If the job situation begins to turn for the worse or begins to level out, then the prices in San Francisco could be overpriced and there could be some correction. As of now, jobs are still being added." 

RealtyTrac Vice President Daren Blomquist said that several cities are now near their lowest point in terms of affordability —an indicator that  bubbles could be emerging. He said these include the usual high-priced cities of San Francisco and Manhattan, but also places like Denver and the Texas cities of Dallas and Austin. 

Nationwide, RealtyTrac recently estimated that affordability has fallen below historic norms in about 9 percent of markets.  

"That is a danger zone for me," Blomquist said in a telephone interview. "That means a bubble is starting to form in those markets." 

Blitzer said the improving jobs picture, rising wages and low mortgage rates are supporting higher home prices. He also said limited inventories are pushing up prices.

“The number of homes currently on the market is less than 2 percent of the number of households in the U.S., the lowest percentage seen since the mid-1980s,” Blitzer said.


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