Twin Cities home price gains are easing, report says
- Blog Post by: Jim Buchta
- September 24, 2013 - 8:41 AM
New data suggest that higher mortgage rates are having a very modest impact on home prices in the Twin Cities and beyond.
The oft-watched S&P Case-Shiller Home Price Index, which tracks repeat-sales of the same property in 20 major metropolitan areas across the country, increased 1.8 percent from June to July, and 12.4 percent compared with last year.
For the fourth month in a row all 20 regions posted monthly gains, but 15 regions and the 20-city composite showed that month-to-month price gains have begun to decelerate.
“Following the increase in mortgage rates beginning last May, applications for mortgages have dropped, suggesting that rising interest rates are affecting housing," said David Blitzer, chair of the Index committee. "The Fed’s announcement last week that QE3 bond buying will continue for the time being may have only a limited, though favorable, impact on housing.”
The Twin Cities, which is often among the standouts in these national reports, didn't fare as well this time - it was among seven regions that saw slower annual growth rates, posting the biggest the largest annual decline in price gains with a 9.5-percent year-over-year increase in July compared with a 11.5-pecent annual increase in June. From June to July, prices in the Twin Cities were up 1.8 percent - in line with the national average.
On a quarterly basis, that index was 7.1 percent higher during the second quarter and 10.1 percent higher than the last four quarters.
In a blog post last week, the group's economist, David Blitzer, said that the report "could show a shift in home prices following the rise in interest rates in May and June."
The latest local market data that's available is from the Minneapolis Area Association of Realtors and its monthly market report. Here's a summary of that data for August:
- Closings: 5,575, up 8.9%
- Median sales price: up 16.9% to $207,900
- Days on market: down 34% to 70
- Percent of original list price received by seller: up 2% to 97.0%
- Months supply of inventory: down 18.2% to 3.6 months
House prices in the Twin Cities and beyond are on the rise because demand is strong and listings are in short supply, but there's another critical factor at play: Fewer homeowners are losing their homes to foreclosure, and that's reducing the number of heavily discounted properties that are hitting the market. The foreclosures are a serious drag on home prices, and this morning there was a good news on that front.
CoreLogic said that during July the average foreclosure rate in Twin Cities and across the county declined, an that the rate in the Twin Cities is well below the national average.
The average foreclosure rate in the metro was 0.94 percent, a decrease of 0.75 percentage points compared to July of 2012 when the rate was 1.69 percent. The national foreclosure rate, which was 2.43 percent during July, also declined.
The mortgage delinquency rate in the Twin Cities metro - an indication of future foreclosure sales and a measure of how many homeowners with a mortgage were 90 days more more delinquent - fell to 3.03 percent from 4.33 percent last year, representing a decline of 1.30 percentage points.
Here's a look at the national market, according to data released this week by several research groups:
- Lender Processing Services. LPS’s Home Pricing Index showed that on a month-by-month basis, home prices slowed their rebound in July, with prices ring just 0.6 percent from June, but 8.7 percent higher than July 2012.
- A Campbell/Inside Mortgage Financing HousingPulse survey suggests that the housing market might be starting to taper off compared with the frenzy of earlier this year. The survey of about 2,000 real estate agents nationwide along with sales data shows a slower growth rate in home sales among first-time buyers, current homeowners, and investors.
- Barclays' third-quarter Regional Housing Update says that based on sales through the second quarter, U.S. house prices will rise by 11 percent this year and 7 percent next year with foreclosures and short sales representing just 2.2 percent of all sales by 2017, down from a current level of 3.8 percent.
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