While residential real estate experts have been forecasting a slowdown in home price growth, in the meantime, properties listed as for-sale continue to sell for higher values than months gone by.
This was especially true in August. Despite being a slow month for mortgage application activity, home prices nationally increased by nearly 7 percent versus the corresponding period in 2014, according to property and data analytics firm CoreLogic. They also rose by slightly more than 1 percent from July.
Though home prices are not expected to decline, CoreLogic confirmed that the pace of gains should slow. For example, by August 2016, home prices are projected to move higher by approximately 4.3 percent on a year-over-year basis.
Growth in housing starts should lead to easing
Frank Nothaft, CoreLogic chief economist, noted that the Federal Reserve may raise interest rates next year, so that could have an impact on how many people venture into the market to buy. That and added residential construction activity should keep home prices from moving at the galloping pace that's been observed.
"Economic forecasts generally project higher mortgage rates and more single-family housing starts for 2016," Nothaft explained. "These forces should dampen demand and augment supply, leading to a moderation in home price growth."
The Home Buying Institute has also made predictions that home prices next year will appreciate at a slower pace, noting that this is the "general consensus" among housing analysts countrywide. The National Association of Realtors has given similar pronouncements.
Biggest price jumps in major metro areas
Meanwhile, major metropolitan areas are highly sought after parts of the country, as appreciable price gains were observed this past August in New York, Los Angeles, Dallas and San Francisco, noted Anand Nallathambi, CoreLogic president and CEO.
"Continued gains in employment, wage growth and historically low mortgage rates are bolstering home sales and home price gains," Nallathambi said.
He added that because demand is moving at a faster pace than inventory can keep up with, continued home price appreciation is likely at least in the immediate future.
Based on the latest numbers available, housing starts in August reached a seasonally adjusted annual rate of 1.1 million units, according to the U.S. Department of Commerce. That's down from year-ago levels, but permit issuance rose, up 3.5 percent to 1.1 million.
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