SAN FRANCISCO (CBS SF) – The San Francisco Bay Area led the major United States markets with a 2.4 percent monthly home price increase, but the gains are decelerating nationally as fewer Americans can afford to buy.
The Standard Poor’s/Case-Shiller 20-city home price index rose 12.4 percent in March compared with 12 months earlier. While healthy, that rate of growth has slowed from both February and January.
Home prices rose in 19 of the 20 cities in March compared with the previous month, with only New York registering a slight decline, Standard Poor’s reported Tuesday. The Seattle area finished just behind the Bay Area with a gain of 1.9 percent.
The housing market has struggled in recent months, after notching strong growth in the first half of 2013.
Rising prices and higher interest rates beginning in the middle of last year made homes less affordable for would-be buyers.
Meanwhile, a limited supply of homes is available to buy. New construction has focused increasingly on rental apartments, instead of single-family homes. And 9.7 million Americans are stuck in homes worth less than their mortgage debts, making them reluctant to sell, according to the real estate data firm Zillow.
The price gains over the past 12 months were the “result of a witch’s brew,” said Stan Humphries, chief economist at Zillow. It was made possible by the lows of the housing bust that began in 2007, the historically low mortgage rates and a limited supply of homes on the market.
“These influences are beginning to fade, and we’re already seeing a monthly slowdown in home prices in more recent data,” Humphries said.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the monthly gains reported by the Case-Shiller index seem excessive.
“Every indicator of housing market activity and prices we know is slowing or falling outright,” Shepherdson said.
The index is not adjusted for seasonal variations, so the gains can reflect the warmer weather after a harsh winter.
Tampa showed the largest slowdown in annual price gains. Its growth rate went from 13.4 percent year-over-year in February to 10.7 percent in March. Las Vegas and the Bay Area posted the strongest year-over-year growth.
Home sales and construction started recovering about two years ago from the Great Recession. But a sharp jump in mortgage rates last spring caused sales of existing homes to start falling in the summer.
Average rates for fixed, 30-year mortgages last week are 4.2 percent, compared to 3.51 percent a year ago.
The National Association of Realtors said Thursday that existing homes sold in April at a seasonally adjusted annual rate of 4.65 million, a 6.8 percent decrease over the past 12 months.
The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The March figures are the latest available.
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