Home sellers are lowering their expectations as buyer demand cools.
None of the 100 largest U.S. metropolitan areas had increases of more than 20 percent in residential asking prices last month -- the first time in almost two years that’s happened, San Francisco-based Trulia Inc. said in a report today. That compares with seven metro areas, including Las Vegas, Phoenix and California’s Silicon Valley, that had such year-over-year gains in May 2013.
“Big price increases mean there are fewer bargains to be found, and the closer prices get to where they should be, the less prices will rise,” Jed Kolko, chief economist at the property-data provider, said in a telephone interview. “I’d be surprised if we see markets getting back to 20 percent-plus gains. More inventory should be coming onto the market, investor activity is declining and affordability is worsening.”
Nationally, asking prices gained 8 percent last month from a year earlier, the slowest pace in 13 months, amid damped demand from both traditional buyers and investors, Trulia said. Prices in Las Vegas and the California cities of Sacramento and Oakland rose about 15 percent, about half the year-earlier gain.
Last month was the first time since July 2012 that none of the 100 largest metro areas had a 20 percent price increase.
Contracts to buy previously owned houses in the U.S. rose 0.4 percent in April, less than economists estimated, the National Association of Realtors said on May 29. They fell 9.2 percent from a year earlier.
While price gains are slowing, the number of markets where asking prices fell is at a post-recession low, Trulia said. Among the top 100 markets, only El Paso, Texas; Hartford, Connecticut; Albany, New York; and Little Rock, Arkansas, had price declines from a year earlier.
Rent growth, meanwhile, is accelerating, Trulia said. Rents are up 5.1 percent nationally, with apartments climbing 5.8 percent and single-family homes gaining 2.1 percent. Among the top 25 rental markets, the biggest increases were in San Francisco, San Diego, Oakland and Denver, all of which had gains of more than 10 percent from a year earlier.
Rents in San Francisco jumped 15.6 percent, with the median monthly cost of a two-bedroom rental reaching $3,550, the highest in the U.S. and more than the $3,500 median in the New York metro area.