Home-price growth continued to ease off the accelerator in November, bolstering economists’ predictions that price growth could slow to be more in line with increases in incomes and inflation this year.
The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 5.2% in the year ending in November, down from a 5.3% increase reported in October.
Price growth slowed considerably in the final months of last year compared to the beginning of the year when prices were growing more than 6%. Many economists expect it to slow even further this year, with price growing in line with inflation at around 2% or 3%. That could be welcome news for buyer who have been struggling with affordability as mortgage rates rose late last year.
“The pace of price increases are being dampened by declining sales of existing homes and weaker affordability,” said David Blitzer, managing director at S&P Dow Jones Indices.
The Case-Shiller 10-city index gained 4.3% over the year, down from 4.7% the prior month. The 20-city index dipped below 5%, gaining 4.7% compared to a year earlier.
Economists surveyed by The Wall Street Journal expected the 20-city index to grow 4.8%.
Las Vegas had the fastest home price growth in the country for the sixth straight month at 12%, followed by Phoenix, where prices grew 8.1%. Seattle returned to the top three after falling out last month, but still prices there grew just 6.3%— about half where growth was a year ago.
About a third of the 20 cities reported greater annual increases in October than November.
Home-price growth combined with rising mortgage rates has slowed sales in recent months. Existing home sales posted their largest annual decline in seven years in November and fell to their lowest level in more than three years in December.