April Case-Shiller Results: Cooling Off
Home prices continued to climb in April, but at a slower pace. The U.S. national index climbed 5.5 percent annually, down from 5.6 percent in March. Annual growth in the smaller 10- and 20-city indices also slowed from 5.2 percent and 5.9 percent in March, to 4.9 percent and 5.7 percent in April, respectively.
Seattle, Portland and Dallas reported the largest year-over-year gains among the 20 cities. Seattle grew 12.9 percent in April, Portland rose 9.3 percent, and Dallas posted an 8.4 percent increase.
Monthly growth in the U.S. national index accelerated to 0.2 percent in April, the same as in March. The 10- and 20-city indeces took a tumble, both falling from their 0.5 percent month-over-month growth rate in March to 0.2 percent for the 10-city index and 0.3 percent for the 20-city index in April.
Below are the actual Case-Shiller results for April alongside Zillow’s forecasts:
High demand from home buyers and a limited supply of homes for sale are the main ingredients in the recipe for rising home prices. Millennials are aging into homeownership, the labor market is booming and wages are growing, three factors that are driving demand. However, the factors keeping inventory low are more complicated. Home builders aren’t matching historic building levels, and it’s unclear whether rising costs, burdensome regulations, a shortage of land to build on, a lack of construction financing or some combination of all these factors is to blame. A surge in the share of single-family homes being converted into rentals is keeping many homes off the market that otherwise may have traded hands every few years. On top of that, plenty of would-be sellers are likely trapped in negative equity and unable to profitably sell. They may even be locked in at incredibly low mortgage rates that may make moving more expensive as rates rise. Buyers’ frustrations with the status quo are certainly understandable, but there is no quick fix to these kinds of supply complications. Aspiring home buyers should remain patient and be ready to move quickly once that perfect home does become available.
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