On the 20-city composite index, home prices were up 13.4 percent in 2013.
Chicago, IL (PRWEB) March 03, 2014
According to the S&P/Case-Shiller Home Price Index on Tuesday, February 25th, home prices in December declined slightly as a result of tight inventory, higher mortgage rates and the cold winter weather. The Federal Savings Bank thinks it's typical for the housing market to slow down in the winter months, as fewer buyers are looking for a home and have less opportunity to make a new home purchase.
Fast Growth Pace Has Expired
On a year-over-year basis however, 2013 home prices across the nation were up 11.3 percent in the fourth quarter of 2013 over the previous year, representing the largest gain since 2005. On the 20-city composite index, home prices were up 13.4 percent in 2013. The price gains were mostly from earlier in the year, and prices actually began to decline toward the end as colder weather approached.
The Federal Savings Bank sees positive monthly changes are slowing. The market needs more first-time homebuyers to participate to move higher.
Fortunately, most experts agree that the housing market will continue to grow and home prices will rise in 2014, though likely at a slower and more sustainable pace. All 20 cities on the index posted yearly price gains in 2013.
"The S&P/Case-Shiller Home Price Index ended its best year since 2005," Blitzer said. in the home price index news release. He added "However, gains are slowing from month-to-month and the strongest part of the recovery in home values may be over. Year-over-year values for the two monthly composites weakened and the quarterly National Index barely improved. The seasonally adjusted data also exhibit some softness and loss of momentum."
Steady growth on the horizon
While the yearly gains were very positive for the housing market recovery, sales and prices did slow down in January, according to the index. Existing-home sales fell at the start of the new year, though that may be a result of the seasonal slowdown. In addition, construction starts, which are a good indicator for housing market health, were down. Overall, the market has recovered back to its pre-recession levels in many regions across the country, with the national average home price on par with 2004 figures.
"Recent economic reports suggest a bleaker picture for housing," Blitzer said. "Existing-home sales fell 5.1 percent in January from December to the slowest pace in over a year. Permits for new residential construction and housing starts were both down and below expectations. Some of the weakness reflects the cold weather in much of the country."
Weather is not the only influence on weaker sales and declining price appreciation, however, as rising mortgage rates could be impacting affordability. Compared to a year ago, mortgage rates have gone up nearly 1 percent. Fortunately, rates have not risen much in 2014, giving more American homebuyers an opportunity to find a low-cost mortgage. The latest report is a positive sign that the housing market has been able to make huge gains since the depth of the recession, when home prices plummeted.
Contact the Federal Savings Bank, a veteran owned bank, to explore affordable housing options.