WASHINGTON – Home prices in the United States are rising more slowly than they were just a few months ago, according to new data out Tuesday — and that may well be just what the housing market needs.
The S&P/Case-Shiller index of home prices in 20 major cities rose 0.2 percent in April, down from 1.2 percent in March and well below the 0.8 percent that analysts forecast. During the past year, prices have risen 10.8 percent, compared with a 13.7 percent gain in the year ended in November, the recent peak. A second report on home prices out Tuesday, from the Federal Housing Finance Agency, showed the same pattern.
Meanwhile, the number of new-home sales rose to a 504,000 annual rate in May, far above the 439,000 analysts had expected, a positive sign for housing. And the Conference Board’s consumer confidence index rose.
Analysts have worried that the rapid rise of home prices — which have climbed much faster than incomes in most metropolitan areas — might lead to new excesses in the housing market. Still, moderation in the rate of home price gains could be good news, in the sense that buyers are less likely than they were a decade ago to stretch to buy a home at any price.
“Although it may seem counterintuitive, this is actually welcome news, because it means that we’re not looking at a bubble,” Patrick Newport and Stephanie Karol of IHS Global Insight wrote in a report.