Home price growth slowed significantly for April, according to a S&P/Case-Shiller Home Price Index report (link opens as PDF) released today.
After home prices increased at an annual rate of 12.4% for March, the index's 20-city home price composite saw year-over-year gains drop to 10.8% for April. Analysts had expected a dip, but their 11.4% estimate still proved too high.
According to today's report, April's slowdown was widespread. Nineteen of the 20 cities saw annual price growth drop, with only Boston managing to come out ahead of March's numbers.
"Although home prices rose in April [0.2% compared to 1.2% for March], the annual gains weakened," noted David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, in a statement today. "Overall, prices are rising month-to-month but at a slower rate. Last year some Sunbelt cities were seeing year-over-year numbers close to 30%, now all are below 20%: Las Vegas (18.8%), Los Angeles (14%), Phoenix (9.8%), San Diego (15.3%) and San Francisco (18.2%). Other cities around the nation are also experiencing slower price increases."
A so-called "supply squeeze" has ostensibly kept many would-be homebuyers at bay, and only recently have prices slowed down enough to allow some potential housing consumers to play catch up.
But as Blitzer put it, the housing market still has a long way to go:
Near term economic factors favor further gains in housing: mortgage rates are lower than a year ago, the Fed is expected to keep interest rates steady until mid-2015 and the labor market is improving. However, housing is not back to normal: prices are being supported by cash sales, low inventories and declining foreclosure and REO [owned by a lender, usually a bank] sales. First time home buyers are not back in force and qualifying for a mortgage remains challenging. The question is whether housing will bounce back before the Fed begins to tighten sometime next year.