U.S. home prices increased in August, yet the pace of these gains continues to slow, helping to improve affordability for would-be buyers.
Prices rose 6.4 per cent in August compared with a year ago, real estate data provider CoreLogic said Tuesday. That marks a decline from an annual gain of 6.8 per cent in July. Home prices had been rising as much as 12 per cent annually toward the end of last year.
Prices rose 0.3 per cent in August from July. But CoreLogic's monthly figures aren't adjusted for seasonality, such as buying that occurs in warm weather.
Sales struck a plateau in the middle of last year and have remained subdued for much of 2014. As sales have slowed, so have price gains. That should eventually make it easier for would-be buyers to afford homes.
Much of any uptick in buying will depend on wage growth picking up. Wages are barely matching inflation, making it harder for families to save for making down payments and monthly mortgage payments.
Hourly wages have risen just 2.3 per cent over the past 12 months, the Labor Department reported last week. And separately, median incomes for an entire household are 8 per cent below their 2007 levels after adjusting for inflation, averaging just $51,939 (U.S.) in 2013, according to the Census Bureau. This has occurred as banks have tightened credit standards.
All states registered home price gains in August, except Arkansas where prices were flat. Home values in Michigan rose 11.1 per cent, followed by gains of 9.2 per cent in both California and Nevada. The Houston area saw home values rise 11.1 per cent compared to the prior year, while Los Angeles, Atlanta, Dallas and Riverside, Calif., enjoyed similarly large gains.
Still, prices nationwide are 12.1 per cent below their peak average in April, 2006.
As the pace of price gains has slowed, so have sales of existing homes.
Purchases fell 1.8 per cent to a seasonally adjusted annual rate of 5.05 million in August, the National Association of Realtors said. Sales fell from a July rate of 5.14 million, a figure that was revised slightly downward. Overall, the pace of home sales has dropped 5.3 per cent year-over-year.
Economists associate annual sales of 5.5 million with a healthy market.
The Realtors also said that median sales price had risen 4.8 per cent over the past 12 months to $219,800, but that average slipped slightly in August compared to prices in July and June.