House price growth headed for a slowdown

by Adam Smith23 Dec 2013
Home values have continued to grow strongly, but the market is headed toward a slower 2014.

The Zillow Home Value Index for November saw a 0.6% month-over-month rise, with prices up 7.1% year-over-year. Of the 485 metro areas covered by the report, only 95 - or 19.6% - saw declines.

While home value growth has remained strong, the pace is slowing, according to Zillow chief economist Dr. Stan Humphries. Humphries said 2013's rapid growth in home values could be attributed to a combination of high demand, low interest rates and home prices and a slowly improving economy.

"Those dynamics are now giving way to more moderating influences, including rising mortgage interest rates, flagging investor demand and slowly increasing for-sale inventory. This slowdown in home value appreciation will contribute to a more balanced market, and will help to ease some emerging affordability problems in a handful of very hot markets, particularly in California," Humphries said.


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