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Home Prices Keep Rising, Slowly
Home prices across the country continue to increase, but at a more moderate pace, per the findings of the latest S&P/Case-Shiller Home Price Index survey—a leading indicator of U.S. home prices.
The composite indices – one measuring 10 cities, the other 20 cities – gained, respectively, 9.4 percent and 9.3 percent in May, a significant drop from the 10.9 percent and 10.8 percent returns recorded in April, thus ending a 14-month streak of double-digit, year-over-year increases in home prices.
While many interpret these findings as a sign that the housing recovery is taking a step back, others say these numbers represent positive news.
“This is an indication that we’re moving toward a more balanced market. The latest S&P/Case-Shiller report still shows a strong market with solid growth,” says Karen Krupsaw, vice president of real estate operations for Redfin in Washington, D.C. “It’s also an indication that last year’s numbers were inflated, and now we are seeing the return of healthier market conditions.”
Jim Esposito, agent with Intercoastal Realty in Ft. Lauderdale, Florida, agrees.
“It shows the market is consolidating instead of building toward another bubble. We are coming out of a severe slump, and it is only natural for home values to bounce sharply off the very bottom,” Esposito says.
The moderation of home-price appreciation “suggests a market that’s behaving the way housing markets have normally behaved over time – as prices increased, demand weakened, and prices either came back down or price appreciation slowed. That’s what we’re seeing now,” says Rick Sharga, executive vice president of Auction.com in Irvine, California.
For buyers who suffered from buyer fatigue in 2013 or who got priced out of the market and decided to postpone their plans to purchase a new home, the upside is that they’re now more apt to enter the market under these current conditions, Krupsaw says.
However, this is still clearly a seller’s market, “so it’s more likely that buyers will pay top dollar for a home than it is sellers will have to offer a discount,” adds Sharga.
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