Home prices reached the half-way mark in the fourth quarter of 2013, climbing back to a level 20 percent above the trough in values reached nationwide in the fourth quarter of 2011 but remaining 21 percent below the peak prices reached in early 2006. The CoreLogic Case-Shiller Indexes for the last three months of 2013 confirmed that more than half of that appreciation occurred between the fourth quarter of 2012 and the fourth quarter of 2013 when prices increased by 11.3 percent nationwide.
The Case-Shiller analysis paints a more restrained picture going forward. Price appreciation over the four quarters of 2014 will be at less than half that in 2013, slowing to 5.3 percent over the course of the year. Even this decreased rate is slightly higher than the historic rate of 4.5 percent recorded since 1975.
“Limited construction of new homes and low inventories of existing homes for sale contributed to the jump in prices,” said Dr. David Stiff, principal economist for CoreLogic Case-Shiller. “Developers remain cautious about building too many new houses until they see stronger demand in their markets.”
The Case-Shiller analysis covers home price trends during the fourth quarter of 2013 in more than 380 U.S. markets. Among the largest metropolitan areas, those with populations over 950,000, the most rapid growth was noted in Las Vegas (+26 percent) and Riverside (+24 percent) and Oakland (+23 percent) California. The three largest metropolitan areas that experienced no change were Oklahoma City, and Tulsa, Oklahoma and Virginia Beach, Virginia. Stiff said that new price peaks, even above 2006 levels were reached in several metro areas including Houston, Dallas, Denver, Honolulu, and Pittsburgh.
Of the largest metropolitan areas Case-Shiller projects the greatest year-over-year gains through the end of 2014 for Tucson, (+11 percent), Rochester, New York (+9 percent) and Hartford (+9 percent). The largest metropolitan areas with the smallest projected gains are Nashville (+2 percent), Sacramento (+2 percent) and Warren, Michigan (+2 percent).
“For the remainder of 2014, investor demand and sales of foreclosed properties should drop off quickly. Traditional buyers are returning slowly to the market, but cannot replace demand from investors who led the market in recent years,” Dr. Stiff said.