Temperatures across the U.S. are plunging and have left many cities frozen in ice and snow. One thing not plunging is home prices. The housing market has continued to experience rising prices along with rising mortgage rates leading to a decline in purchasing power. Rising home prices and rates deal a double blow to affordability.
According to the S&P Case-Shiller Home Price Index, which follows 20 large cities in the U.S., home prices rose 13.61 percent year-over-year and increased .18 percent from the month of October to November. Las Vegas had the largest year-over-year gain of 27.05 percent while New York and Cleveland tied for the smallest gain of 4.9 percent.
CoreLogic’s most recent home price report for November 2013, reported home prices (including distressed sales) rose 11.8 percent year-over year. November’s increase in home prices is the 21st straight month of year-over-year growth. CoreLogic reports home prices gained 0.3 percent (excluding distressed sales) in November versus October. CoreLogic economist Mark Fleming said in the release, “The housing market paused as expected in November for the holiday season with very low month-over-month appreciation.”
According to CoreLogic data, 2013 was the best year for rising home prices in the past 8 years. It is projected that 2013 year-end results will show an overall jump of 11.5 percent. “It’s too early to tell if the marginal dip in the annual pace of house price inflation in November marks the start of the slowdown in price gains that we are expecting. But we are confident that annual price gains will not remain in double-digit territory for much longer,” Capital Economics’ Paul Diggle commented.
This is positive news for potential home buyers still waiting to get into the game. Mortgage rates dipped to around 4.5 percent last week and many economists doubt this will hinder home sales in the short term (as noted in several recent blogs). Rates are still historically low. Due to the recent pull back in mortgage rates, refinances ticked up 5 percent last week. Overall refi activity is down 69 percent from a year ago when rates were more than a percentage point lower.
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