Home price growth remained steady for the month of May, posting a 4.9 percent increase which is similar to April levels but lower than economists' expectations.
The S&P/Case-Shiller Home Price Index was released on Tuesday, reports the Wall Street Journal (WSJ), which showed that the 20-city index marked a 4.9 percent gain year-over-year. The May home price 20-city index was lower than the 5.7 percent increase expected by Wall Street Journal economists. The 10-city index also rose to 4.7 percent from previous year, while the home price index covering the entire nation increased to 4.4 percent. This is slightly higher than the 4.3 percent increase in April.
In the report, WSJ also noted that home price increases remained "largely flat" in 2015, with gains at just over 4 percent following the double digit increases in 2013. The publication added that this "likely is a good sign that the market is stabilizing closer to levels that most buyers can afford." David Blitzer, the managing director and chairman of the Index Committee at S&P Dow Jones Indices, said that price gains are likely to "continue slowing" and eventually stabilizing at around 3 percent.
The S&P executive added that the rate of home price increase is "more likely to slow than to accelerate" in the next two years or so. This is attributed to rising prices of US homes that are keeping home buyers off the housing market. The high cost of homes coupled with the shortage in inventory, low new home sales and housing starts will "sooner or later have a cooling effect on the market," said Blitzer.
However, among the 20 cities included in the survey, USA Today reports that some of the housing markets remained hot. These markets includes Denver, San Francisco, and Dallas. The home prices of these cities saw higher levels compared to same period last year, marking increases of 10, 9.7 and 8.4 percent, respectively.
The USA Today report also mentioned Blitzer citing first time homebuyers as the "weak spot in the market." He added that these home owners may have been put off with the high downpayments when purchasing a home. Blitzer explained, "Without a boost in first timers, there is less housing market activity, fewer existing homes being put on the market, and more worry about inventory."
