US home prices rose in October at a slightly slower pace, as real estate sales have fallen and affordability has increasingly become a challenge for potential buyers.
The Standard & Poor’s/Case-Shiller 20-city home price index increased 4.5 per cent in October from 12 months prior.
The figures reported Tuesday mark the eleventh straight month of price gains decelerating and the smallest gain since October 2012.
The slowdown in price growth comes after surging double-digit increases for much of 2013. Home values climbed as the market recovered from bottoming out in 2011 in the aftermath of the housing bust and the Great Recession.
But home prices have outpaced lacklustre wage growth, leaving many potential buyers unable to afford homes and causing both sales and price growth to stall this year.
The recent decline in mortgage rates has yet to bring more buyers into the market.
Simultaneously, there are fewer distressed properties and bargains coming onto the market that attract investors as buyers.
All of that has occurred despite an improving US economy that has generated 2.65 million new jobs so far this year, as the unemployment rate has dropped to 5.8 per cent from 6.7 per cent at the start of 2014.
Prices barely budged over the past 12 months in Cleveland (up 0.9 per cent), Chicago (1.9 per cent), New York (2 per cent), Phoenix (2.1 per cent) and Washington, DC (2.2 per cent).
Still, there are signs that broader improvements in the US economy may be causing prices to rise faster in some cities. Compared to September, eight cities reported stronger year-over year prices growth in October. This includes San Francisco (up 9.1 per cent), Denver (7.2 per cent) and Tampa (6.1 per cent).
“We are seeing hints that prices could end 2014 on a strong note and accelerate into 2015,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.
The Case-Shiller index covers roughly half of US homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The October figures are the latest available.