Growth continues to temper in US housing market
US property is continuing to see its growth temper, as house prices increased by just 0.2 per cent in October. Figures from Core Logic showed that while real estate values are 12.5 per cent higher on an annual basis - the 20th month in a row this has been the case - the market is cooling somewhat month-over-month. This will be a welcome relief for those previously concerned that unbridled growth would lead to another property bubble.
If distressed sales are excluded, October saw prices increase 0.4 per cent for the month and 11 per cent year-on-year. This trend is expected to continue for the remainder of the year, with a projected annual increase of 12.2 per cent in November. Anand Nallathambi, president and chief executive officer of Core Logic, explained that this is a sign the housing market is catching its breath as the year draws to a close. "The deceleration in month-on-month trends was anticipated as strong gains in home prices over the spring and summer slow in line with normal seasonal patterns and the impact of higher mortgage interest rates," he said.
Mark Fleming, chief economist for the firm, added that the "slowdown in price appreciation is positive for the housing market as almost half the states are now within ten per cent of their respective historical price peaks". Indeed, there has been considerable growth in many areas of the US. During October the five states with the highest home price rises were Nevada, California, Georgia, Michigan and Arizona, which saw increases of 25.9 per cent, 22.4 per cent, 14.2 per cent, 14.1 per cent and 14 per cent respectively. This includes distressed sales. In fact, the only state to show depreciation was New Mexico, which witnessed a value decline of 0.5 per cent.
When distressed sales are excluded, the five states with the greatest growth were Nevada (22.5 per cent), California (18.5 per cent), Utah (13.3 per cent), Florida (13 per cent) and New York (12.4 per cent).
The slowdown of the market is the beginning of a wider trend, according to the Zillow Home Price Expectations Survey. It is believed the next five years will see growth ease considerably, after increasing rapidly and unsustainably this year. In 2014, growth is expected to drop off to around 4.3 per cent from 6.7 per cent annually this year.