Smart Borrower Blog

Home Price Appreciation Stalls for Third Month

Dec 26th, 2018 @ 10:43 PM by Amber Nelson

While home prices continue to rise compared with last year, they are slowing in their gains, according to the latest Case-Shiller Home Price Index produced by S&P Dow Jones Indices and CoreLogic, a result of mortgage rates and home prices outpacing growth and income.

U.S. home prices rose 5.5% in October over the previous year, a rate unchanged from September. And September’s pace was down from August’s 5.7% price gain.

“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. Fixed rate 30-year mortgages are currently 4.75%, up from 4% one year earlier,” said S&P Dow Jones Indices Managing Director and Chairman of the Index Committee David Blitzer. “Home prices are up 54%, or 40% excluding inflation, since they bottomed in 2012. Reduced affordability is slowing sales of both new and existing single-family homes.”

Interest rates on 30-year fixed rate mortgages that started at 3.5% at the beginning of 2017 have reached as high as 4.94% in November of this year. Such a quick climb in rates has made it difficult for buyers to save money fast enough to keep up with the increase in mortgage costs.

On a monthly basis, 11 of the largest 20 U.S. housing markets experienced no price gains or price decreases. Those included a 1.1% decline in Seattle, a 0.7% decrease in San Francisco and a 0.6% price decline in Portland. The Phoenix area saw the largest price gains month-to-month in October with a 0.7% increase. New York was next with a 0.4% rise and Las Vegas, Charlotte and Tampa all had a 0.3% price increase during the same time.

On a yearly basis, all 20 of the largest markets posted price appreciation growth with Las Vegas home prices leading at 12.8%. That was almost twice as much growth as any other market.

National price appreciation is likely to continue its slower path at the Fed recently increased its target rate, which may filtered down to raise mortgage interest rates in the coming months.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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