Average home prices in the U.S. rose 4.7 percent year-over-year in December, falling from 5.2 percent in November, according to the latest Case-Shiller U.S. National Home Price NSA Index released on Tuesday.
Home value growth has been slowing across the US over the past five months, with most experts expecting the trend to continue into much of 2019. This month’s growth has not been this low since August 2015.
“Even at the reduced pace of 4.7 percent per year, home prices continue to outpace wage gains of 3.5 percent to 4 percent and inflation of about 2 percent,” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, in a statement. “A decline in interest rates in the fourth quarter was not enough to offset the impact of rising prices on home sales.”
That said, most experts predict home affordability will not increase drastically in the coming months, as inventory remains low and income continues to lag. Many housing markets, particularly on the West Coast, may also remain overvalued for a long time to come.
“Slower price appreciation coupled with lower mortgage rates in 2019 should help home buyers who haven’t been priced out of the market,” said Realtor.com Chief Economist Danielle Hale in a prepared statement. “While 2018 started with a real estate frenzy and ended with a fizzle, we could see 2019’s slow beginning start to pick up later in the year.”
“For years, the housing market has been anything but ‘normal’ or ‘balanced,'” Aaron Terrazas, Zillow’s senior economist, said in a statement. “But as the start of the busy home shopping season looms, someone squinting at the market might be able to find signs of both normalcy and balance as the market continues to cool off after a years-long sizzle.”