Home price appreciation slowing down

2/11/2014 5:27:23 PM

As a bitter cold grips much of the U.S., the housing market has seen a slightslowdown in home price growth. According to a recent report by the National Association of Realtors, home prices continued to grow in the fourth quarter of 2013, but at a slower rate than previous quarters of 2013.

The median price of a single-family home rose in 73 percent of the housing markets measured by NAR, or 119 out of 164 metropolitan areas. The gains seen in the final quarter of 2013 were comparable to levels from the fourth quarter of 2012. Some housing markets did much better than others at the end of the year, with 26 percent - 42 markets - reaching double-digit increases. Unfortunately, 43 markets reported lower median home prices, revealing there is still improvement to be seen in the housing recovery.

Better prospects for buyers
Compared to the third quarter of 2013, the final months of the year saw a sharp decline in price appreciation. Of the measured markets in the third quarter, 88 percent reported increases with 33 percent experiencing double digit rises. Low inventory levels are likely the cause of several double-digit price jumps.

"The vast majority of homeowners have seen significant gains in equity over the past two years, which is helping the economy through increased consumer spending," said Lawrence Yun, NAR chief economist. "At the same time, home prices have been rising faster than incomes, while mortgage interest rates are above the record lows of a year ago. This is beginning to hamper housing affordability."

According to Yun, some homebuyers might have a hard time finding a home and could potentially be priced out of some housing markets. Fortunately, while mortgage rates are higher than they were a year ago, Americans can still find a low cost mortgage from most lenders. Slower price appreciation, along with a higher supply of homes for sale, will help home buyers - particularly first-time home buyers - find a new property in the competitive housing market.

"Added housing supply will help moderate price growth this year, and should help to stem erosion in affordability, but mortgage interest rates are projected to rise above 5 percent by the end of the year," Yun said.

Mortgage rates are expected to rise throughout 2014, but for the time being, rates are remaining low and affordable.

Contact the Federal Savings Bank, a veteran owned bank, to find out more about affordable housing options.