...But the Housing Market Recovery Continues to Lose Strength
The S&P Case/Shiller index of home prices in 20 major U.S. cities released on Tuesday of this week showed prices rose 4.5% in 2014 compared to a 13.4% increase in 2013.
On a month-to-month basis, home prices in most big cities rose only modestly from November to December. But an index of prices nationwide was lower, extending a slowdown that's been going on for months. "The housing recovery is faltering," said David M. Blitzer, director of indexes at S&P Dow Jones. "While prices and sales of existing homes are close to normal, construction and new home sales remain weak.” Blitzer added that new homes are being built at a rate of 1 million homes per year, a level normally only seen during a recession. The weakness in home prices comes despite a number of factors that would normally support robust home sales, such as job growth, low mortgage rates and rising levels of consumer confidence. Stan Humphries, the chief economist at Zillow, said the slowdown in prices is a sign the housing market is returning to "normal" following a period of "runaway appreciation."
The news for homeowners in Atlanta, Miami and other cities across the West Coast was more encouraging. Home prices in those markets rose more than 5% in the past year. Meanwhile, home prices in the Midwest and Northeast did not grow as fast. Boston's 3.8% increase was the largest among any city in the Northeast.
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