Home prices in 20 U.S. cities registered their smallest gains since late 2012, decelerating for a 10th month in January as buyers held out for more affordable properties.
The S&P CoreLogic Case-Shiller index of property values increased 3.6% from a year earlier, down from 4.1% in the prior month and below the median estimate of economists, data showed Tuesday. Nationally, home-price gains slowed to 4.3%, the lowest since 2015.
The data indicate that the 2018 slump in housing extended to the start of this year amid the longest-ever government shutdown and still-elevated home prices. Potential buyers may have remained cautious after stocks had their worst December since the Great Depression, and a separate report this month showed sales of new homes fell to a three-month low in January.
At the same time, other data suggest the market has since picked up: A report last week showed sales of previously owned homes rebounded in February to the fastest pace in almost a year. The seasonally adjusted 20-city index gained 0.1% from the prior month, less than projected. Economists watch the year-on-year gauge to better track trends, and home-price gains have slowed enough that they’re roughly in line with wage increases. A separate report Tuesday showed that new-home groundbreakings fell in February by the most in eight months on a drop in single-family homes, suggesting buyers and builders remain wary despite higher wages and a drop in mortgage rates.
“It remains to be seen if recent low mortgage rates and smaller price gains can sustain improved home sales,” David Blitzer, chairman of the S&P index committee, said in a statement.
All 20 cities in the index still showed year-over-year gains, led by a 10.5% increase in Las Vegas and 7.5% in Phoenix. The weakest gains were in San Diego, with 1.3%, and San Francisco at 1.8% — down from 10.2% a year earlier. Seattle, another formerly hot market, showed a 4.1% annual increase, sharply decelerating from 12.8% last year. Prices in 14 cities rose from the prior month on a seasonally adjusted basis, while five declined and one was unchanged. The biggest drop came in San Francisco, at 0.6%.