Home values in Seattle continued their steady ascent in April, according to the latest Case-Shiller national home price report.
Among the major metro markets, seven cities reported greater price increases in the year ending April versus the year ending March. Seattle (12.9 percent), Portland (9.3 percent) and Dallas (8.4 percent) experienced the sharpest annual gains, closely followed by Denver.
That being said, the year-over-year gain in the overall index for single-family home values dropped to 5.0 percent, which is the smallest year-over-year gain since July of 2012 and versus 7.8 percent higher on a year-over-year basis at the same time last year, led by gains in the bottom third of the market. Analysts were expecting an increase of 5.9 percent for the month, according to Thomson Reuters consensus estimates. Eighteen of 20 cities tracked in this study reported increases in April before the seasonal adjustment, but only 13 saw increases after the seasonal adjustment.
Home prices are rising roughly twice as fast as average wages, a dynamic that may eventually stifle sales by thwarting would-be homeowners. Home prices could hit a ceiling, according to S&P Dow Jones Indices Committee Chairman and Managing Director David M. Blitzer, but not give way to collapse.
"Since demand is exceeding supply and financing is available, there is nothing right now to keep prices from going up", Blitzer said.
"The increase in real, or inflation-adjusted, home prices in the last three years shows that demand is rising", Blitzer saud.
"High demand from home buyers and a limited supply of homes for sale are the main ingredients in the recipe for rising home prices".
"For the moment, conditions appear favorable for avoiding another crash", he said.
Housing market observers have long speculated a looming increase in mortgage rates could slow demand, in turn putting the brakes on home prices. Moreover, mortgage default rates are low and household debt levels are manageable. That annual growth rate was a step back from a 4.4 percent increase in March. And many single-family homes were converted to rentals after the housing bust and are likely to remain off the for-sale market.
By Zillow's count, there are 22 percent fewer homes on the market now than this time previous year.