Home prices rose faster in the third quarter than at any time since 2006, but are expected to slow considerably in 2014, according to data released Thursday by Corelogic.
Indeed, pending home sales data from the National Association of Realtors, also released Thursday, came in weaker than expected, showing a decline of 8.7% vs. the previous month. Consensus estimates were for just a 0.3% drop.
Corelogic expects the pace of home price increases to slow to 4.2% nationally through the third quarter of 2014, close to its long-term annual average of 4.5% recorded since 1975.
According to the Corelogic data, prices rose nearly 30% in Las Vegas and in several California cities, while Detroit also saw a near-20% jump. Gains in Northeastern cities such as Philadelphia and Hartford were around 3%.
“Investor demand and sales of foreclosed properties are dropping quickly,” said CoreLogic Case-Shiller economist David Stiff. “This is especially true in states that were caught up early in the bubble and have non-judicial foreclosure proceedings, such as California and Arizona. In these states, inventories of bank-owned properties are close to being cleared. Non-investor demand, although increasing, will not replace demand from investors.”
Home prices across the U.S. were 17% above the trough reached in the fourth quarter of 2011, but they are still 23% below the peak reached in the first quarter of 2006, Corelogic concluded.