Us house price growth slows at start of year
Las Vegas has seen the largest inventory increase in the US, helping to moderate soaring price rises Photo credit: Moyan Brenn
National house prices edged up 0.2 per cent in January 2014 compared to the previous month, according to Zillow, a far cry from the booming values of the last 12 months. Indeed, the data marks the smallest monthly price increase since May 2012.
The slower rate of growth is primarily being caused by the addition of new inventory to the market. Low supply of property fuelled staggering rises in value last year, but the number of homes listed for sale on the US site climbed 11.1 per cent annually in January, the fifth month in a row of year-on-year stock increases.
Indeed, the number of properties on the market increased in 22 of the 35 largest metro areas covered by Zillow's report, with the largest inventory gains coming in some of the areas that were hit hardest by the housing recession, including Las Vegas (up 42.8 per cent), Phoenix (up 30.5 per cent) and Sacramento (up 26 per cent). These metros also experienced significant cooling in the pace of home value appreciation in January, as buyers had more homes to choose from.
"Last year, tight inventory contributed to very rapid home value appreciation," comments Zillow Chief Economist Dr. Stan Humphries. "Now, more inventory is helping to moderate home value increases in many areas. This increased supply is coming from many sources, as more sellers are free to list their homes after being released from negative equity, builders continue to ramp up construction and many homeowners decide to list their homes and capitalize on recent gains.
Humphries adds that the market will be closer to normal by the end of 2014, as what rapidly transformed into a seller's market balances back in favour of buyers too.
"As the market shakes off a long winter and gears up for the spring season, we should see buyers gaining a bit more leverage this year than they've had in the past, with more choice and less competition. This slightly more balanced market is another step on the road back to normal, and will help offset the impact of rising mortgage rates and more expensive homes for buyers," he continues.
Year-over-year, U.S. home values rose 6.3 pe cent in January, down from peak gains of 7.1 per cent in August 2013. For the 12-month period from January 2014 to January 2015, national home values are expected to rise another 3.4 per cent to approximately $175,301.