Dive Brief:
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Home price growth again came up short of analyst expectations, rising 5.5% in April while economists had predicted a 5.9% increase for the month, according to a CNBC analysis of the latest S&P CoreLogic Case-Shiller U.S. National Home Price Index.
- The 20-city home price index ticked up 5.7% year-over-year for the month, representing a departure from March’s report which marked a 33-month high for price growth.
- For the third-consecutive month, Seattle, Portland, OR, and Dallas reported the largest year-over-year hike in home-prices at 12.9%, 9.3% and 8.4%, respectively. Seven cities saw higher annual price gains in April 2017 than did so the month before.
Dive Insight:
The S&P/CoreLogic Index follows a similar report from Black Knight Financial Services that found home prices reached their all-time high of $275,000 in April after increasing a total of 3.6% since the beginning of this year. The organization's Home Price Index saw prices rise in all of the 20 largest U.S. states and 40 biggest metro areas, with the top 10 strongest-performing metros notching up 2% or more.
The pattern of lagging supply being outstripped by accelerating demand continues to drive up price pressure on the market, with new- and existing-home inventory slipping to only a four-month supply, according to David M. Blitzer, S&P Dow Jones Indices' managing director and chair of the Index Committee. And that growth is giving rise to concerns that price gains could lead to another bubble down the road — though current conditions, including low mortgage default rates and manageable debt levels, don't point to an immediate crash on the horizon.
Existing-home sales edged up in May, following a 2.3% drop in April that, in large part, stemmed from a dearth of available inventory in the face of high demand. New-home sales, in turn, saw their figures rise 2.9% for the month to a rate of 610,000, after 7.9% fall the month before.
While home sales figures report their typical ebbs and flows, some analysts fear the trend of home-price gains outpacing income growth could push increasingly more prospective buyers back into the rental market. That pattern likely won't see relief until more new inventory comes online to entice current homeowners out of their existing properties and into newer, larger homes, opening up much-needed entry-level inventory for the growing class of first-time, millennial buyers.
A drop-off in housing starts to an 8-month low, however, in addition to sagging builder confidence, could mean even further slowdowns in new homebuilding activity.