North Bend and Seattle Area Home Prices Appear to Have Peaked for Now as Economic and Seasonal Variables Have Effect
According to the Associated Press, home prices rose in August from a year earlier at the fastest pace since February 2006. But the price gains slowed in many cities from July, a sign that rising prices over the last year may have peaked.
Other reports released on Tuesday showed that consumer confidence fell sharply this month as the federal government was partly shut down for 16 days, while retail sales dipped in September. And inflation at the wholesale level was negligible.
The Standard & Poor’s/Case-Shiller20-city home price index rose 12.8 percent over the 12 months that ended in August. That compares with 12.4 percent in July from a year earlier. All 20 cities showed year-over-year gains.
But a measure of month-over-month prices for the 20 cities rose just 1.3 percent in August. That is down from a 1.8 percent month-over-month gain in July. And 16 of the 20 cities reported more modest price increases in August than in July.
Greater demand and a tighter supply of homes for sale have helped drive prices higher over the last year. But over the summer, mortgage rates rose from their record lows. Weak job growth is also discouraging potential home buyers. These factors, together with the extremely low inventory levels in the Seattle metro and Eastside markets helped push home prices to levels not seen since the 2007 collapse.
Consumers grew particularly pessimistic in their outlook on the economy six months from now, while their assessment of current economic conditions declined much less severely. They also expect less hiring in the months ahead. Consumers’ confidence is closely watched because their spending accounts for 70 percent of economic activity, and a decline in confidence is likely to reduce economic growth.
The latest reports were delayed by the recent government shutdown, and the real estate market numbers are influenced by the normal seasonal variables — after a very active spring/summer season, buyers have settled in for the winter and the upcoming holiday season.
If you want to buy or sell in the Seattle and Snoqualmie Valley area, Summit brokers are ready to help with expertise and enthusiasm — winter, spring, summer, or fall.
Happy November! — JP