Average Home Prices Up 10% Annually, But Not Sustainable

Average home prices showed a 10.2% year-over-year increase in August, marking heights near the peak of the housing bubble in 2006, according to Clear Capital’s home price index. 

The increase warrants a close look at home prices and the market in general, Clear Capital’s vice president of research Alex Villacorta says, though the analysis noted home prices are still off by 32.5% compared with their highest peak. The current pace does not warrant worry over a new bubble, Clear Capital said. 

“With the continued strengthening of home price trends in August, the need for perspective on market activity is even more important,” Villacorta said. “National yearly gains surpassed 10.0% for the first reported time since the peak of the market in mid 2006. Certainly these trends are exciting, particularly against the backdrop of the seemingly endless housing market woes following 2006. It’s been a long, hard road and it’s difficult not to celebrate double digit price growth.”

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But Clear Capital expressed caution with regard to the August tally, as the trend is likely to temper in the coming months. 

“It’s important, however, to note a few sub-surface trends that signal these gains will likely subside over the coming months,” Villacorta said. “Average quarterly gains in the top performing 15 major metros signal moderation is already underway, when annualized and compared to current yearly
growth.”

Written by Elizabeth Ecker

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