NEW YORK (TheStreet) -- Home prices are still rising but at a slower pace, largely due to the growing supply in the market.
Prices remained flat in September from the previous month but were up 4.9% from a year earlier, according to Tuesday's S&P/Case-Shiller Home Price index, which measures prices of 20 metropolitan cities.
"A large part of the slowdown in prices comes from increasing supply," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, told TheStreet. "Earlier this year and over the past year, we've heard comments that supply is tight and people were postponing selling their home, but that situation seems to have changed and the housing market is easing back a little bit."
The number of unsold homes on the market is 5.2% higher than it was a year ago, the National Association of Realtors said last week.
Florida saw price increases during the month in cities such as Tampa and Miami. The Northeast region posted its first monthly decline since late last year, while Washington, D.C. suffered the greatest slump of any city on the index, with a 0.4% drop in September.
While Blitzer expects the slowing of price gains to continue into 2015, next year will likely bring more clarity on when the Federal Reserve will raise short-term interest rates, which have remained near zero since December 2008.
So far, the Fed has been sticking to its "considerable time" language -- that is, rates will remain low for a considerable time after its bond stimulus program, known to investors as quantitative easing, ended last month.
"Once the Fed does raise rates, that will probably spark renewed interest in mortgages, especially refinances more than anything else, as buying takes a little more doing than refinancing," Blitzer said.
Right now, the average rate on a 30-year fixed mortgage is about 3.99%, compared to 4.22% last year at this time, according to Freddie Mac.
-Written by Scott Gamm in New York.