Robust US home price gains cool slightly in April

Robust US home price gains cool slightly in April

In New York, home prices rose only 3.8 percent year-over-year, the third weakest pace among 20 major cities measured by Case-Shiller.

The S&P/Case-Shiller U.S. National Home Price Index is a composite of single-family home price indices that is calculated every month; the indices for the nine U.S. Census divisions are calculated using estimates of the aggregate value of single-family housing stock for the time period in question.

Home prices in Minneapolis increased a more modest 6.3 percent. And according to David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, the continuing rise in prices raises concerns of another housing crisis.

Home prices are rising roughly twice as fast as average wages, a dynamic that may eventually stifle sales by thwarting would-be homeowners. The 10-city and 20-city composite indices posted annualized gains of 4.9 percent and 5.7 percent, respectively.

Condo prices in the Chicago area did a bit better on a year over year basis with a 4.4% gain, but that's also the lowest gain in 5 months. The median price of a Twin Cities metro area home in May was $250,000, according to MAAR, 5.5 percent higher than it was a year earlier.




"The question is not if home prices can climb without any limit; they can't", Blitzer said.

"High demand from home buyers and a limited supply of homes for sale are the main ingredients in the recipe for rising home prices".

Blitzer added that "conditions appear favorable for avoiding a crash", although he theorized that "any increase in mortgage interest rates would dampen demand". Moreover, mortgage default rates are low and household debt levels are manageable. "While prices can not rise indefinitely, there is no way to tell when rising prices and mortgage rates will force a slowdown in housing".

The typical family looking for a starter home in the Seattle area has to spend about half their income on it, the Times report said.

Housing market observers have long speculated a looming increase in mortgage rates could slow demand, in turn putting the brakes on home prices. The real price of homes remains almost 34 percent lower than the last market peak in the summer of 2006 and is also running about 10 percent lower than the real prices in 2000.

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