WASHINGTON – A measure of U.S. home prices rose only slightly in September from August, a sign that prices are levelling off after big gains earlier this year.
Real estate provider CoreLogic said Tuesday that home prices increased 0.2 per cent in September from the previous month. That’s sharply lower than the 0.9 per cent month-over-month gain in August and well below the 1.8 per cent increase in July.
Prices still rose 12 per cent in September compared with a year ago.
Higher mortgage rates and steady price increases began to slow home sales in September. As a result, price gains have cooled off.
Mortgage rates are still very low. And the average rate on a 30-year fixed loan has fallen to 4.1 per cent in the past month, down from a two-year high of nearly 4.6 per cent over the summer.
“This deceleration is natural and should help keep market fundamentals in balance over the longer-term,” said Anand Nallathambi, president and CEO of CoreLogic.
Many economists expect the housing recovery to continue, though with slower gains in sales. Still, the spike in rates over the summer has weighed on the market. A measure of signed contracts to buy homes fell 5.6 per cent in September to the lowest level in nine months.
There is generally a one- to two-month lag between a signed contract and a completed sale. The sharp drop in September suggests final sales will decline in the coming months.
The annual price gains are widespread, according to CoreLogic. Prices rose in all 50 states and in all 100 of the largest U.S. metro areas.
Price jumped 25.3 per cent in Nevada from a year earlier, the most in any state. California (22.5 per cent), Arizona (14.6 per cent), Georgia (14.4 per cent) and Michigan (13.9 per cent) reported the next highest gains.
Home prices are still about 17 per cent below the peak reached in April 2006, according to CoreLogic.