Home Prices Increase at a Lower Rate

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The good news for the housing market keeps coming up. In addition to the considerable growth in the sales of existing and new homes in May 2014, the home prices are heading towards stability. This will favor both home buyers and investors and have a positive impact on demand and on housing growth as a whole.

The S&P/Case-Shiller home price index indicates that over the past year the home prices in the 20 major cities in the United States rose by 10.8%. This is much lower than the peaked marked in November 2013 when prices rose by 13.8%. On a monthly basis, the index rose 1.2% in March 2014 and by just 0.2% in April 2014. Analysts see a clear trend of rising prices on a monthly basis but at a slower pace.

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The new trend in home prices is the strongest in cities which experienced increases well over 30% over the past months. Now the growth in prices there is way below 20%. The home prices in Los Angeles mark an increase of 14.0% on an annual basis. In San Diego the increase is 15.3%. In Las Vegas it is 18.8%.

Analysts agree that there is more room for growth as currently the home prices are 3% undervalued compared to long-term fundamentals. If the steady pace of increase remains, we can expect an overall stabilization in the market with the risk of a bubble forming remaining very low. Inventory is expected to increase as fewer existing homeowners will remain underwater.

The slower growth in home prices is projected to have a positive increase on the demand for housing as well, especially in combination with the low mortgage rates, which are currently just above 4%. With the improvement in the labor market, more people will be able to afford a house.

If the slow growth in home prices remains, there will be major improvement in the housing market.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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