A lethargic spring buying season has brought months of declines for national home price gains, with May tacking on as the fifth consecutive month, according to the latest market report.
“The rising price floor in the low tier sector of the market has squeezed investor returns, thereby removing a key demand segment,” Dr. Alex Villacorta, vice president of research and analytics at Clear Capital, said in the report. “We don’t expect to see a large pop in prices through the summer buying season.”
Data analyzed in the Clear Capital Home Data Index Market Report shows a wide variation in home price growth across the 50 major metro markets — with a range of 22.3 percentage points over the last year —and within some of the markets’ own ZIP codes.
Cleveland, Ohio, has the largest variation in ZIP code performance, according to the report. The top performing Cleveland ZIP saw 42.3% annual growth, while its lowest performer saw -23.3%.
Alternatively, in Rochester, N.Y., the spread was narrow — only 4.4 percentage points. But this performance, the report shows, was an exception, since 44 major metro markets experienced a spread greater than 15 percentage points over the last year.
By the end of the year, home prices are expected to normalize in the -5% annual growth range, the report said.
“We don’t expect a market with waning investor demand to withstand any eye-popping rates of growth,” Villacorta said in the report. “While some might be discouraged by a weak spring buying season, we are encouraged that price trends are finally calibrating back to pre-bubble norms. Despite other headwinds, moderating home prices will serve as the foundation to a more balanced market moving forward.”
To read the full report, click here.
Written by Emily Study