Another Tough Home Buying Season on the Way?

Home prices continued their upward climb over the last 12 months, ending 2017 with a growth of 6.3 percent according to the December 2017 data on the S&P CoreLogic Case-Shiller National Home Price Index that was released by S&P Global on Tuesday.

“Home prices capped the year on a high, reflecting 2017’s favorable economic conditions which were characterized by strong consumer fundamentals such as job growth and low unemployment. Demand also grew with mortgage rates in December holding below 4 percent despite a mid-month interest rate hike by the Federal Reserve,” said Cheryl Young, Senior Economist at Trulia.

However, these numbers could also herald another tough home-buying season as inventory remains scarce going into 2018. “The stage is set for another tough home buying season. Starter home buyers will again bear the brunt of frustration as affordability remains out of reach, exacerbated by mortgage rates marching upwards to usher in 2018,” Young said.

According to the data, Western U.S. remained the hottest housing market, with Seattle, Las Vegas, and San Francisco reporting the highest year-over-year gains among the 20 cities covered under the index’s 20-City Composite.

Though the overall 20-City Composite posted a 6.3 percent year-over-year gain, slightly down from 6.4 percent in the previous month, Seattle posted a 12.7 percent year-over-year increase in home prices—leading the market for home prices. Seattle was followed by Las Vegas which showed an 11.1 percent increase, and San Francisco with a 9.2 percent increase in home prices.

“Seattle and Las Vegas had the fastest growing prices for the second month in a row and continued their double-digit growth in December. Prices are up throughout the country, but these two markets are seeing the growth that’s almost double the U.S. average,” said Joe Kirchner, Senior Economist at Realtor.com. “This year, we could see Las Vegas taking the top spot from Seattle in the 20-City composite.”