Nationally, home price growth in the United States dropped to 6.7% year on year, and figures from Clear Capital show just a 1% quarter on quarter growth in November. The trend for price growth moderation can also be seen at the regional level, with the West showing the strongest levels of moderation throughout the country as a price growth has now slowed for 11 consecutive months.
According to the article in Propertywire, yearly price growth in the West has slowed to below 10% for the first time since the start of the recovery three years earlier. It’s anticipated that price growth will continue to moderate for the next few months for the rest of the nation.
It’s likely rates of growth will continue to fall, particularly as investor interest continues to decline as a result of fewer distress sale opportunities. Even though the economy has improved this confidence hasn’t yet filtered down to traditional home buyers, and there are concerns that the market isn’t strong enough to support a continued recovery without the distress sale market.
The figures also show a steady decline on the national year on year rates of growth. In December 2013 they reached a high of 11.7% but have now dropped 5%. This is due partly to natural correction within the housing market as the distressed inventory continues to decline. Overall this is a healthy trend for the real estate market, but the weakness of price growth is causing some concern.
When distress sales are excluded, the national home price growth over the past year was just 4.4%, down from a high of 7.2%. Quarterly growth rates have dropped to just 0.6% compared to the previous quarter which registered growth at 1.1%.
Real estate experts think the recovery of the housing market is at a tipping point, as the reduction of distressed sales combined with price moderation could prove too much as we enter the slower winter months. They point out that the markets need investor demand to have a strong comeback and for buyer confidence to be restored. The worry is that quarterly price declines at a national level could turn into yearly price declines by the end of next year.
It’s expected as the markets continue to normalize that growth from the distress segment will reduce, and overall that should be regarded as a good thing as it shows the lingering effects of the housing crisis are gradually being eliminated.