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Home prices remain in a cooling pattern


U.S. home-price gains slowed for the third consecutive month in October, but prices were still ascending, rising above an already record level on a nationwide basis and well beyond income gains and inflation in several major cities, according to the S&P CoreLogic Case-Shiller Indices.

Overall prices rose in nine of the 20 cities tracked by Case-Shiller, and were up significantly over the month of October in Phoenix (up 0.7 percent), New York (up 0.4 percent) and Tampa (up 0.3 percent).

homepricefotoPhoenix also posted the third-highest annual gain at 7.7 percent, displacing Seattle, where the market prices started cooling off in the summer. Seattle still ranked fourth nationwide in annual home appreciation at 7.3 percent as of October, however.

The two cities with the highest annual appreciation in home prices in October were Las Vegas (up 12.8 percent) and San Francisco (up 7.9 percent), Case-Shiller reported. These estimates weren’t seasonally adjusted. When seasonally adjusted, home prices rose in 18 of the 20 cities over the month, according to Case-Shiller.

“Home prices in most parts of the U.S. rose in October from September and from a year earlier,” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.

“The combination of higher mortgage rates and higher home prices rising faster than incomes and wages means fewer people can afford to buy a house,” he added.

Home prices fell over the month in eight cities, including significantly in the high-cost West markets of Seattle (down 1.1 percent); San Francisco (down 0.7 percent); Portland, Oregon (down 0.6 percent); Denver (down 0.3 percent); and San Diego (down 0.1 percent).

Prices also fell over the month in the more affordable Midwest markets of Cleveland (down 0.5 percent); Chicago (down 0.3 percent); and Minneapolis (down 0.1 percent).

When making a seasonal adjustment, however, prices fell over the month of October only in San Francisco (down 0.6 percent) and Seattle (down 0.3 percent), according to Case-Shiller.

On a nationwide basis, as of October, home prices rose 0.1 percent over the month and 5.5 percent annually. The 10-city and 20-city composite indices were flat in October, and rose 4.7 percent and 5 percent, respectively, year over year.

All three of Case-Shiller’s indices were at a record levels in October without adjusting for inflation or other factors. The national index is 11.6 percent higher than its previous 2006 peak; the 10-city and 20-city were 0.6 percent and 3.6 percent higher, respectively.  

CoreLogic’s Deputy Chief Economist Ralph McLaughlin said home prices have been cooling off, but that doesn’t signal that the market is about to collapse.

“Slowing price appreciation is still appreciation, and the current rate is more than double that of inflation,” McLaughlin said. “This continued growth, coupled with rising inventory and falling mortgage rates, suggests the bottom isn’t falling out of the housing market,” he said. “Instead, the housing market is taking on a healthy diet that will allow it to be in better shape for the homebuying season come spring.”


 

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