Home price appreciation slowed in July, according to the latest S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index. The Index reported a 6 percent annual gain in July year over year, down from June’s 6.2 percent. Month over month, the National index reported a 0.4 percent increase. David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, discussed what impact the slowing, but still rising, appreciation rates have had on affordability.
“Rising homes prices are beginning to catch up with housing,” said Blitzer. “Housing starts rose in August due to strong gains in multifamily construction. The index of housing affordability has worsened substantially since the start of the year.”
Ruben Gonzalez, Chief Economist for Keller Williams notes the impact of the inventory shortage on appreciation.
“We have started to see some evidence that inventory restrictions may begin to ease in some markets; however, levels are still low and we expect to continue to see year-over-year price gains in the 5 to 7 percent range in the near term nationally,” said Gonzalez. “If inventory does begin to increase, we may see the pace of growth slow slightly moving into 2019.”
According to Danielle Hale, Chief Economist for Realtor.com, the slowing of appreciation has not improved affordability concerns and notes the possible upcoming rate hike’s impact.
“Although the national pace has slowed, home prices continued their relentless march upward in July,” said Hale. “Coupled with mortgage rate increases, higher prices are stifling home sales as more buyers are priced out of the market. Affordability is only going to become more of an issue after the Fed raises rates this week and is likely to cause even more trouble for home sales. The solution to our affordability problem is Economics 101 — if we add more supply through new construction, it will help meet buyer demand and soften the pace of price increases.”
Cheryl Young, Senior Economist for Trulia, also commented on the affordability concerns. Young's comments mirror Hale's: slower price growth has not been enough to improve affordability."
"This marks the fourth consecutive month that annual home price growth has slowed, and the lowest the index has been since September, 2017," said Young. "With slumping or flat new and existing home sales, another month of price deceleration points to a softening housing market. July saw mortgage rates dipped slightly after hitting highs unseen since May 2011, but this did not offer much solace to home buyers already facing severe unaffordability in the housing market"