New data from Case-Shiller shows that January home prices rose at the fastest rate since 2014. While this spells a win for sellers, it could eventually affect buyer demand.
According to the Wall Street Journal, home prices rose 5.9 percent in the 12 months ended in January, the strongest increase in 31 months, up from a 5.7 percent year-over-year increase reported in December.
The strong growth in prices poses a challenge for first-time buyers trying to get into the market this year.
“This spring market looks to be heated. There are a far larger number of buyers chasing after fewer inventories,“ said Lawrence Yun, chief economist at the National Association of Realtors.
“Prices are easily outpacing people’s income growth” which is causing “consternation for renters who are trying to get into the homeownership market.“
The markets with the most activity were in the northwest, with Seattle seeing an 11.3 percent increase, with Portland showing a 9.7 percent year-over-year gain and Denver with a 9.2 percent increase.
In September, home prices hit a new record high, driven by strong demand and a shortage of available homes. The number of homes for sale was down 7.1 percent in January compared with a year earlier.
“Tight supplies and rising prices may be deterring some people from trading up to a larger house and also shrinking the number of households that can afford to buy at current price levels,” said David Blitzer, managing director at S&P Dow Jones Indices.
“At some point, this process will force prices to level off and decline — however we don’t appear to be there yet.”
In month-over-month numbers, the U.S. index rose 0.2 percent in January, while the 10-city average rose 0.3 percent and the 20-city average rose 0.2 percent.
Purchases of previously owned homes were down in both January and February, with tight inventory and rising prices frustrating would-be buyers. Existing homes sells declined 3.7% in February. ##
(Image credits are as shown above.)
Submitted by RC Williams to the Daily Business News for MHProNews.
