Case-Shiller Home Price Index Flattens in April

Home-price growth slowed in April, but economists said that a down month is a positive sign the market isn’t overheating. The S&P/Case Shiller Home Price Index, covering the entire nation, rose 4.2% in the 12 months ended in April, weaker than a 4.3% increase in March. The 10-city and 20-city indexes saw weaker increases in April than in March. The 10-city index gained 4.6% from a year earlier, basically unchanged from 4.7% in March. The 20-city index gained 4.9% year-over-year, compared to a 5% increase in both March and February. In 2013, home prices were rising in the low double digits, raising fears that many buyers would be priced out of the market because incomes were growing much more slowly. “We’ve moved from something we couldn’t sustain to something that’s a lot more reasonable,” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. Month-over-month home prices were tepid, according to the report. Not seasonally adjusted, the U.S. Index rose 1.1% from March to April. The 10-city index saw a 1% month-over-month change and the 20-city index saw a 1.1% change over the month. More: Pending Home Sales Rise to Over Nine-Year High in May After seasonal adjustment, the national index was unchanged and the 10- and 20-city composites were up 0.4% and 0.3%. San Francisco, one of the country’s hottest markets, seems to finally be leveling off. Year-over-year, prices in San Francisco grew 10% in April compared to 10.3% the month before. In late 2013, prices were growing 25% year-over-year. In Denver, prices grew 10.3% year-over-year, roughly the pace that they have been growing at over the last several years. Case Shiller gives a lagging read on the housing market, showing how it was performing more than a month ago. Poor weather may have contributed to a slow market in April. A number of reports showed weak growth in April, but early indicators are that the market has picked up momentum since then. The pace of sales of previously owned homes rose 5.1% in May from April, according to the National Association of Realtors. The median sale price for a previously owned home was up 7.9% to $228,700 from a year earlier in May. Economists are predicting the 2015 could be the best year for the housing market since the crisis, as more first-time home buyers enter the market and wages improve. The National Association of Realtors is predicting that prices in 2015 will surpass their 2006 peak—although factoring a decade later those prices are more modest. Indeed, after a huge boom and bust economists said that they are hopeful the housing market is finally settling down into healthy levels of growth. “It’s the most normal it’s been since the early 2000s,” said David Berson, chief economist at Nationwide Insurance. Still, new-home construction is well below typical levels, contributing to a shortage of inventory that has been driving up prices in hot markets such as Denver and San Francisco. “We’re not quite normal yet,” Mr. Berson said. Write to Laura Kusisto at laura.kusisto@wsj.com This article was originally published on The Wall Street Journal