In February home prices were unchanged, after slumping 0.1% in each month since November, according to the S&P/Case-Shiller’s 20-city composite index. After seasonal adjustments, monthly home prices rose 0.8%.
Meanwhile, longer-term trends show that price growth is slowing down.
On a year-over-year basis, home prices rose 12.9% in February, down from 13.2% in January and a recent peak of 13.7% in November.
Low inventory levels have supported price growth over the past year. Indeed, despite the recent slowdown in annual growth, year-over-year rates remain close to the fastest pace since 2006.
National home prices remain about 20% below a 2006 peak. However, real estate trends are largely dependent on local markets, and it’s clear that certain regions are doing better than others. For example, Denver and Dallas recently reached fresh peak prices. Meanwhile, prices in Las Vegas, which was hit particularly hard when the bubble burst, are still down 45% from a peak in February, Las Vegas home prices fell 0.1%, the first drop in almost two years.
Looking forward, economists expect home-price growth to continue to slow as more sellers becoming willing and able to place their homes on the market. In addition, there’s evidence that the rapid price gains over the past year are curbing some demand. Sellers will need to make sure that prices don’t run too far ahead of income growth, especially during a choppy jobs market and an economy with rising rates.