U.S. home prices again showed solid growth in December, capping a strong year, though the gains were slightly lower than expected.
The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 5.4% in the 12 months ended in December, greater than a 5.2% increase in November. The 10-city index gained 5.1% from a year earlier, compared with a 5.2% increase in November, while the 20-city index was up 5.7%.
“While home prices continue to rise, the pace is slowing a bit,” David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a news release. “Seasonally adjusted, Miami had lower prices this month than last and 10 other cities saw smaller increases than last month. Year-over-year, seven cities saw the rate of price increases wane.”
But the gains in December were still the strongest since July 2014. “The takeaway is that prices have a little bit further to rise,” Nela Richardson, chief economist at real-estate brokerage Redfin, told the Wall Street Journal. “There are some tailwinds behind prices because supply is so low.”
The National Association of Realtors reported Tuesday that existing-home sales rose 0.4% in January, the biggest jump since July 2015, and the median sale price for a previously owned home last month was $213,800, up 8.2% from a year earlier.
“The spring buying season is right around the corner and current supply levels aren’t even close to what’s needed to accommodate the subsequent growth in housing demand,” Lawrence Yun, the NAR’s chief economist, said.
The hottest markets in the country, primarily on the West Coast, continued to show double-digit price gains, with Portland reporting an 11.4% year-over-year increase, followed by San Francisco with a 10.3% increase and Denver with a 10.2% jump.
According to the WSJ, economists expect home-price growth to moderate in 2016, as buyers begin to reach the limits of what they can afford, especially in the most expensive markets.