US house price growth cooling but likely to still rise over 3% in next year
Some housing markets in the United States are starting to cool but overall home values are expected to rise another 3.1% between now and August 2015.
The latest Home Value Index from real estate firm Zillow rose 6.6% to $175,600 in August, the slowest annual pace in the last 12 months.
The cooling market offers a clear view of local markets that favour either buyers or sellers and the hottest markets are on the West Coast with quick sales and high asking prices. Top are San Jose, San Francisco and Seattle.
But some still recovering markets remain a bargain for buyers as more homes went up for sale. These include Cleveland, Philadelphia and Providence.
Overall the index shows that home values increased by 0.1% in August compared with the previous month and are up 6.6% from August 2013.
According to the latest Zillow analysis of buyers' and sellers' markets, sellers in the Bay Area, Seattle and Dallas have the most negotiating power, with final sale prices largely at or above asking.
For those looking to buy a home, the Northeast and Midwest offer the most favourable conditions, as buyers are less likely to be faced with the fierce bidding wars seen across the West Coast and in larger cities across the country.
In this analysis, a sellers' market is not necessarily one where home values are rising, but rather one in which homes are on the market for a shorter time, price cuts occur less frequently and homes are sold at prices very close to, or greater than their last listing price. In buyers' markets, homes for sale stay on the market longer, price cuts occur more frequently and homes are sold for less relative to their listing price.
‘Real estate has always been local, but as we continue to put the housing recession further in the rear view mirror, the largely uniform performance of local markets is also fading,’ said Zillow chief economist Stan Humphries.
‘We now have several different types of markets emerging, including markets that are still muddling along the bottom. Markets that shot up immediately after the recession ended and are now cooling quickly,’ he explained.
‘And markets that are still very hot. Each of these environments presents unique challenges and opportunities for buyers and sellers, and what works in one area won't necessarily work in another,’ he added.
National home values have risen month on month for more than two years, though the pace of monthly home value appreciation has slowed as a result of increased numbers of properties for sale entering the market. The number of homes listed for sale on Zillow in August was up 20.6% year on year and 2.1% month on month.
Meanwhile, the Zillow Rent Index shows that national rents rose in August by 0.7% compared with July to a Zillow Rent Index (ZRI) of $1,328. Year on year, national rents were up 3.3% in August.