Christman: Home price growth to slow in 2014
May 28, 2014 – NAFCU Research Assistant Doug Christman says home price growth – which peaked in 2013 – will likely slow this year as housing inventories improve, interest rates rise and stricter mortgage rules are implemented.
Christman analyzed data from the Federal Housing Finance Agency on the first quarter of 2014, which showed the Housing Price Index rose 1.3 percent, seasonally adjusted. Home prices were up 6.6 percent from a year before, compared to a year-over-year gain of 7.6 percent in the fourth quarter of 2013.
He also looked at the S&P Case-Shiller National U.S. Home Price Index, which showed a 0.2 percent gain in home prices the first quarter of 2014, and data from the National Association of Realtors Existing Home Sales, which showed a 5.2 percent increase in median home prices in April, non-seasonally adjusted, compared to a year earlier. Each data source reflects a slowdown in home prices in different segments of the housing markets.
“Severe winter weather slowed down home buyer activity in the first quarter of 2014, but home price appreciation began to slow in the previous quarter,” Christman said. “This was due in part to a spike in interest rates in the third quarter of 2013, which caused homes overall to become less affordable. Also, the proportion of distressed home sales fell sharply in 2013 from the previous year, but has tapered recently which helped mute year over year comparison of home prices.”
Christman also said the increasing proportion of multi-family home sales is expected to cause a decrease in the overall median home price of existing home sales.