The pace of U.S. home-price growth slowed down at the end of 2013, but despite this the year saw the fastest calendar-year price growth in eight years, according to data released Tuesday.
U.S. home prices ticked down 0.1% in December, declining for a second month, with 11 of 20 tracked cities posting drops, according to S&P/Case-Shiller’s composite index. After seasonal adjustments, home prices in December rose 0.8%, down a bit from 0.9% in November.
“Gains are slowing from month-to-month and the strongest part of the recovery in home values may be over,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. “The seasonally adjusted data also exhibit some softness and loss of momentum.”
On a year-over-year basis, home prices rose 13.4% in December, the fastest calendar-year growth since 2005, supported by a low inventory of homes available for sale. However, December’s year-over-year growth is down from a recent peak of 13.7% reached in November.
Going forward, price growth may continue to slow down if inventories rise as more sellers become willing and able to place their homes on the market. Also, climbing mortgage rates could curb some demand, economists say.
But slower price growth isn’t necessarily a bad thing. Prices that run too high too quickly for an extended period would keep many would-be buyers from purchasing a home. Notably, Phoenix, which was hit particularly hard when the bubble burst, saw home prices decline 0.3% in December, the first drop in more than two years.
Despite 2013’s rapid gains, U.S. home prices in December were down about 20% from a 2006 peak. Details underlying Tuesday’s report reveal a lopsided recovery, with certain markets, such as Dallas and Denver, recently setting record highs for prices, while homeowners in other areas are grappling with unwieldy mortgages. Indeed, Florida, Michigan and three other states made up almost half of the country’s completed foreclosures in 2013, according to a recently released report from CoreLogic.
