Home Price Gains in 20 U.S. Cities Slow for a Seventh Month

(Bloomberg) -- Home prices in 20 U.S. cities slowed in October for a seventh consecutive month, extending the longest streak since 2014, a sign of waning demand amid higher mortgage rates and elevated property values.

The 20-city index of property values increased 5 percent from a year earlier, after rising 5.2 percent in the prior month, S&P CoreLogic Case-Shiller data showed Wednesday. The median estimate in a Bloomberg survey of economists called for a gain of 4.9 percent. Nationally, home prices climbed 5.5 percent from October 2017.

Key Insights

• The data showing the slowest pace of price gains in two years are the latest signs housing is in a broad slowdown, with sales and building also showing recent signs of weakness.
• The seasonally adjusted 20-city index gained 0.4 percent from the prior month, versus an 0.3 percent estimate. Economists watch the year-on-year gauge to better track trends, which show home-price have been outpacing wages.
• Price gains taking a breather would be especially attractive for younger buyers or those purchasing a house for the first time; however, softer price gains also mean smaller advances in homeowner equity for others.
• “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,” David Blitzer, chairman of the S&P index committee, said in a statement. “Reduced affordability is slowing sales of both new and existing single family homes. Sales peaked in November 2017 and have drifted down since then.”

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• All 20 cities in the index showed year-over-year gains, led by a 12.8 percent increase in Las Vegas and almost 8 percent increases in both San Francisco and Phoenix.
• The weakest gains were in Washington, which rose 2.9 percent on year, Chicago, which climbed 3.3 percent, and New York, up 3.1 percent

To contact the reporter on this story: Jeff Kearns in Washington at jkearns3@bloomberg.net

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Jeff Kearns

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