An index of home prices in 20 of the largest U.S. metro areas shows that home prices have been on fire for a year-over-year basis since February of 2006. However recent market trends show home price gains have started to cool. The housing market usually cools in the fall and winter months as families reject moving during the school year and as the holidays approach. According to experts much larger market forces are hurting demand.
The rapid price increases that characterized major markets this year eased in 16 of the 20 large metro areas showing slower month-over-month increases in August compared with July. Families and investors that jumped into the market have backed off as the supply of homes has expanded and the rising values frustrate potential buyers.
Consumers who once saw bargains everywhere have pulled back as more owners have listed their homes hoping to cash in on higher prices. Las Vegas had the largest annual price increase in August at 29.2%, San Francisco at 25.4%; Los Angeles at 21.7% and San Diego at 21.5% saw similar price jumps.
The National Assn. of Realtors revealed Americans signed fewer contracts for previously owned homes in September than any other month. In Southern California the median home price has stayed flat for the third straight month, according to research firm DataQuick.
Tight accesses to credit and higher flood insurance rates have also made buying harder for some home shoppers. Housing prices are expected to continue to rise despite outside factors and declining affordability.
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