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Home prices rise at slower pace

By Polyana da Costa · Bankrate.com
Tuesday, February 25, 2014
Posted: 3 pm ET

U.S. home prices increased in 2013, but the market seems to have cooled in recent months, according to two home price reports released today.home-equity-generic-6-lg

Home prices jumped 11.3 percent in the fourth quarter of 2013, compared to a year before, according to the S&P/Case-Shiller Home Price Indices. The index ended its best year since 2005, says David M. Blitzer, managing director and chairman of the S&P Dow Jones Index Committee.

"However, gains are slowing from month to month, and the strongest part of the recovery in home values may be over," Blitzer says in a release. "Year-over-year values for the two monthly composites weakened, and the quarterly national index barely improved. The seasonally adjusted data also exhibit some softness and loss of momentum."

Case-Shiller's 20-city composite index showed a monthly decline of 0.1 percent in December.

The biggest losers were:

  • Cleveland : -1.2 percent
  • Minneapolis: -0.7 percent
  • Chicago and Seatlle: -0.5 percent

The metro areas with the biggest monthly gains were:

  • Miami: 0.9 percent
  • Las Vegas: 0.4 percent
  • Tampa, Fla.: 0.3 percent

The FHFA Index

Another home price index, released Tuesday, shows a similar trend. The Federal Housing Finance Agency's, or FHFA's, house price index rose 1.2 percent in the fourth quarter of 2012, the 10th quarterly price increase in the seasonally adjusted index. But the index rose only 0.8 percent in December.

"Home price appreciation in the fourth quarter was considerable, but more modest than in recent periods," says FHFA principal economist Andrew Leventis. "It is too early to know whether the lower quarterly growth rate represents the beginning of more normalized price appreciation patterns or a more significant slowdown."

Prices rose 7.7 percent in the fourth quarter, compared to the same period last year.

The seasonally adjusted HPI rose in 38 states during the fourth quarter of 2013, down from 48 states in the third quarter. The top five states in annual appreciation were Nevada, California, Arizona, Oregon and Florida.

Why do the indexes differ?

The indexes differ from each other mainly because of the way they are calculated.

The FHFA's home price index is calculated using home sales price information from mortgages sold to or guaranteed by Fannie Mae and Freddie Mac.

The Case-Shiller composite index is based on the value of homes in 20 metro areas across the country. The index tracks repeat sales to compare values of homes for the same properties over time.

Indexes aside, what do you see in your area? Are home prices rising, or do you think the market is slowing down?

Follow me on Twitter: @Polyanad.

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