Home prices in 20 U.S. cities advanced at a slower pace in the 12 months through September as the housing market continued to make gradual progress.
The S&P/Case-Shiller index of property values increased 4.9% from September 2013, the smallest gain since October 2012, after rising 5.6% in the year ended in August, the group reported today in New York. Nationwide, prices rose 4.8% after a 5.1% year-to-year increase a month earlier.
Housing prices have cooled this year as more properties are put up for sale and investors retreat to the market’s sidelines. Slower appreciation will probably help foster a pickup in homeownership, particularly among first-time buyers and people having trouble obtaining credit, once wage growth becomes more pronounced.
“This is actually a healthier, slow-but-steady improvement in the housing market,” Lindsey Piegza, chief economist at Sterne Agee & Leach Inc. in Chicago, said before the report. “The last variable, arguably the most important variable, that we need to get into place is wages. We need to see that income growth in order to ensure we’ll have continued positive new demand in 2015, 2016 and beyond.”
The median forecast of 31 economists surveyed by Bloomberg projected a 4.6% gain in the 12 months ended in September. Estimates ranged from 4.2% to 5.2%.
Another report confirmed prices are decelerating. Property values were little changed in September, the weakest reading since November 2013, according to figures from the Federal Housing Finance Agency. In the third quarter, prices rose 0.9% after a 1% gain.
Seasonally adjusted, prices in 20 cities increased 0.3% in September, matching the Bloomberg survey median, after falling 0.1% the prior month. Unadjusted prices were little changed.
All 20 cities in the index showed a year-over-year gain, led by a 10.3% rise in Miami and a 9.1% advance in Las Vegas. Cleveland showed the smallest year-over-year increase, with prices rising 0.8%.
The year-over-year gauge, based on records dating back to 2001, is a better indicator of trends in prices than the month- to-month data, the group has said. The panel includes Karl Case and Robert Shiller, economists who created the index.
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