December Case-Shiller Results and January Forecast: Slowing home price gains

For years, the housing market has been anything but “normal” or “balanced.” But as the start of the busy home shopping season looms, someone squinting at the market might be able to find signs of both normalcy and balance as the market continues to cool off after a years-long sizzle.

Annual home price growth, while still rapid in a handful of the most in-demand and/or affordable markets, has fallen to a pace not far off historic norms and feels largely sustainable for now at a national level of 4.7 percent year-over-year in December. That pace is down from 5.1 percent in November, according to the Case-Shiller® home price index.

Las Vegas once again led the way, with an 11.4 percent annual gain, followed by Phoenix at 8 percent and Atlanta at 5.9 percent.

Additional headwinds were reported by the Census Bureau today, which said housing starts fell 11.2 percent in December from November.

Inventory is certainly not “back,” but modest gains are being made month-after-month, and buyers are likely to have more choice this spring than they have in years. Mortgage interest rates have stabilized below recent peaks and look set to remain in their current range near historic lows for the time being, a boon to buyers’ budgets.

On their own, none of these small shifts would be likely to move the needle much in terms of rebalancing the buyer/seller dynamic, but taken together, they represent a meaningful swing in buyers’ favor – just in time for spring.

Zillow forecasts that Case-Shiller's January indeces will show a 4.4% gain in national home prices.

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