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Home-price growth shows signs of abating

U.S. home prices moved up yet again at quick pace in June, but there have been signs that the pace of appreciation could be finally easing somewhat.

Year over year, home prices rose at an annual pace of 6.8 percent in June, CoreLogic reported. The month-over-month gain on a national basis was at a slower 70 basis points, compared to the 1.1 percent month-over-month increase in May, when prices were rising at an annual clip of 7.1 percent, according to CoreLogic.

homepricegrowth(1)CoreLogic is predicting that the pace of home-price growth will slow further, and projects a 5.1 percent annual gain through June 2019. Prices were still rising by double digits on an annualized basis in Washington state, Idaho, Nevada and Utah, CoreLogic said. 

Other recent studies suggest that the pace of home-price growth has been slowing a bit with the bump in mortgage rates and a recent slowing in home sales.

“Home prices are still going up almost everywhere across the country but, in our second-quarter report, we did see some evidence that home price appreciation is cooling off,” said Daren Blomquist, senior vice president at Attom Data Solutions.

In the second quarter, annual price growth slowed in 80 of the 122 metro markets tracked by Attom Data, which is 66 percent of the markets. On a national basis, the growth in home prices has decelerated for five consecutive quarters. The median U.S. home price of $255,000 in the second quarter of this year was up 6.3 percent annually to a new record high, according to Attom Data, but it was the slowest annual appreciation rate since the second quarter of 2016.  

“There was a pop right after the presidential election in the first quarter of 2017,” Blomquist told Scotsman Guide News. “We actually saw 10 percent appreciation nationwide, and ever since then, we have seen steady declines in price appreciation. From a macro-market perspective, this is actually a healthy development.”

On Wednesday, the National Association of Realtors reported that the median U.S. home price was $269,000, in the second quarter. That was up 5.3 percent year over year and a new record, but the gain decelerated from a 5.7 percent annual gain in the first quarter. San Jose, California, and San Francisco had the two most expensive housing markets in the second quarter, with median prices of $1.41 million and $1.07 million, respectively.  

Black Knight reported that the average home gained just 0.93 percent in value in May, the lowest rate of growth for that month in four years. Prices in May typically jump up significantly.  

Black Knight said 32 states, and 33 out of the 50 largest metros, experienced slowing home-price appreciation. The deceleration in pricey California was three times the national average.  

“All that said, the annual rate of home-price growth is still historically high at 6.3 percent, some 2.5 percentage points above long-term norms,” said Black Knight Executive Vice President Ben Graboske. “For more than six years, we’ve been riding a wave of home price appreciation above the 25-year average. The question now is whether tightening affordability will end that streak and if more deceleration is on the horizon.” 


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