Home price data for April shows another record high, the fifth consecutive month of new peaks.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index which covers all 9 US census areas hit its highest reading (188.50), rising 5.5% from a year earlier, but easing from the 5.6% gain for March.
The 10-City Composite annual increase was 4.9% (to 197.19), down from 5.2% the previous month; and the 20-City Composite posted a 5.7% year-over-year gain (to 210.64), down from 5.9% in March.
Month-over-month (before seasonal adjustments), the National Index was up 0.9% in April; the 10-City was up 0.8% and the 20-City gained 0.9%. After seasonal adjustments, the National and 10-City readings were 0.2% and the 20-City was up 0.3%.
“As home prices continue rising faster than inflation, two questions are being asked: why? And, could this be a bubble?” says David M. Blitzer Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.
He said that strong demand which outstrips supply, and the availability of mortgages, means that price gains are not restricted…at least for now.
But he noted that they cannot continue higher forever and the questions is what form the change will take; a gentle easing or a painful crash.
“For the moment, conditions appear favorable for avoiding a crash. Housing starts are trending higher and rising prices may encourage some homeowners to sell,” Blitzer said.
“Mortgage default rates are low and household debt levels are manageable. Any increase in mortgage interest rates would dampen demand. Household finances should be able to weather a fairly large price drop,” he added.
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