Asking Prices for Homes Cool but Still at Post-Bubble High
NEW YORK ( TheStreet) -- Asking prices on homes for sale continued a slowdown in October, but price gains are still strong.
According to Trulia's Price Monitor, asking prices rose 0.6% month-over-month in October, the second slowest monthly gain in seven month.
The government shutdown in October did not seem to hurt asking prices materially. There was no difference in October month-over-month changes in metros affected by the shutdown vs. other metros.
The price slowdown was more due to rising mortgage rates, expanding inventory and declining investor activity.Still, gains are high compared to historical norms. Quarter-over-quarter, prices were up 3.1% and the year-over-year increase was 11.7%, the largest yearly gain since the bubble burst. "Asking prices are rising quickly because buying still looks cheap relative to renting -- and also because inventory remains tight, even though it has increased since January," according to Trulia economist Jed Kolko. "Even though the market is far from bubble territory, we still see the effects of fast-rising prices, including investors flipping homes and would-be sellers waiting longer to put their homes on the market." The asking price monitor is a leading indicator of how home prices are trending nationally. Asking prices lead sales price by about two months. Other home price indices, such as the S&P/Case-Shiller Index have also been indicating a slowdown in home prices, although these indices reflect changes with a lag. CoreLogic on Tuesday said home prices rose 12% year-over-year in September, but gained only 0.2% month-over-month. The CoreLogic Pending Home Sales Index projects another 12.5% year-over-year increase in October but the monthly gain would still be a mere 0.1%. "Asking prices could potentially slow further if consumer confidence suffers from the ongoing budget uncertainty and future shutdown and debt-default worries," said Kolko. Meanwhile, rents are up 2.7% nationally. In San Francisco, rents are up a whopping 10.1% year-over-year. What's more, the median rent for a two-bedroom in the city is $3,250, edging out New York at $3,150. Read more in For Seriously Unaffordable Homes Try San Francisco Bay Area . -- Written by Shanthi Bharatwaj in New York. >Contact by Email. Follow @shavenk
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