Robust US home price gains cool slightly in April

Robust US home price gains cool slightly in April

US home prices grow just 5.5 percent in April, missing analysts' expectations

NEW YORK, June 27 USA single-family home prices accelerated at a slower pace than expected in April, a survey showed on Tuesday. From February to March, Miami home prices increased by 0.3 percent.

David M. Blitzer, managing director at S&P Dow Jones Indices, which produces the Case-Shiller index, acknowledged concerns that a price bubble may be developing.

Home prices are rising roughly twice as fast as average wages, a dynamic that may eventually stifle sales by thwarting would-be homeowners.

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"If mortgage rates, now near 4 percent, rise further, this could deter more people from selling and keep pressure on inventories and prices", Blitzer said in a statement.

The widely tracked 20-city home price index rose 5.7 percent from April 2016. Analysts were expecting an increase of 5.9 percent for the month, according to Thomson Reuters consensus estimates.

"The increase in real, or inflation-adjusted, home prices in the last three years shows that demand is rising", Blitzer said. That's the lowest year over year gain in 5 months and once again Chicago finds itself 4th from the bottom in the ranking of the metro areas. "Adding to price pressures, mortgage rates remain close to four and affordability is not a significant issue".

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High demand and low inventory are responsible for home price hikes across the country, Case-Shiller says. "For the moment, conditions appear favorable for avoiding a crash". That annual growth rate was a step back from a 4.4 percent increase in March.

Having gained 1.5 percent in April, the index for the bottom third of the Bay Area market is now running 10.4 higher versus the same time a year ago.

"While this is welcome news for homebuyers, the number of homes listed for sale is not meeting consumer demand and markets are getting tighter", First American's chief economist, Mark Fleming, said. Rather, will home price gains gently slow or will they crash and take the economy down with them? Seattle recorded the greatest gains with a 12.9 percent year-over-year price increase, followed by Portland with 9.3 percent and Dallas with an 8.4 percent increase.

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From March single family home prices in the Chicago area rose by 1.0%, which I should remind you is largely a seasonal effect.

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