Home prices in the U.S. are on the rise but the increases appear to be leveling off.
Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index was unchanged in March from a month earlier, posting a 6.5% annual increase. The 20-city composite posted a 6.8% year-over-year gain, also unchanged from the previous month — beating analysts’ estimates of 6.4%.
Amazon’s headquarters city Seattle led the 20-city index yet again with a 13% year-over-year price increase — double the national index pace. Chicago, posting a 2.8% increase, reported the lowest 12-month gain in the 20-city index.
“Any doubts that real, or inflation-adjusted, home prices are climbing rapidly are eliminated by considering Chicago,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones, in a press statement.
The inventory problem
“Looking across various national statistics on sales of new or existing homes, permits for new construction, and financing terms, two figures that stand out are rapidly rising home prices and low inventories of existing homes for sale,” Blitzer said.
The shortage of homes for sale in the U.S. continues to lift home prices. In April, the amount of homes for sale fell over the prior year for the 35th consecutive month to a total of 1.8 million. Homes were being scooped up in just 26 days after being listed — leaving just four months of unsold inventory on the market.
“Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising,” said Blitzer, noting that despite the increases, “compared to the price gains of the last boom in the early 2000s, things are calmer today.”
The national index peaked at 14.5% in September 2005. While Seattle is close to that rate, U.S. home prices are far from those levels, he added.
Amanda Fung is an editor at Yahoo Finance.