Home prices rose by 4.9% between May 2014 and May 2015 — substantially less than economists had predicted they would, S&P/Case-Shiller's 20-City Composite Home Price Indices revealed on Tuesday.
The pace of the May price gain was about the same as in April, leading some economists to point to slow home construction and new home sales, which lag behind sales of existing homes.
Still, David Blitzer, chairman of the S&P Dow Jones index committee, said rising home prices “are sending more upbeat signals than other housing market indicators,” like single-family construction starts.
Some economists have said a slower pace for price increases is a signal of a normalizing housing economy, noting that home values are increasing about twice as fast as inflation or wages. Blitzer predicted that single-family prices are “more likely to slow than to accelerate.”
He also called the lack of first-time homebuyers “the weak spot in the market.” Consumers who don’t buy first homes don’t refinance their mortgages or buy move-up houses, either. That means “less housing market activity, fewer existing homes being put on the market and more worry about inventory," Blitzer said in a statement.