Fitch: U.S. Home Price Growth Stalls for First Time in 2 Years

Fitch Ratings-New York-21 October 2014: The two-year streak of U.S. home price growth appears to have come to a close, according to Fitch Ratings in its latest quarterly index report.
National home prices fell by less than 1% between 1Q'14 and 2Q'14 after more than two years of steady increases. While the magnitude of the decline is benign, the relatively flat prices are in stark contrast to recent price gains. Home prices increased roughly 20% nationally between 4Q'11 and 1Q'14. 'The cooling of the US housing market comes as no surprise after several years of unsustainable growth rates,' said Director Sean Nelson. 'It's also worth noting that nearly all major cities are experiencing the same home price flattening at the same time. 'Most of the metro areas that experienced large home price increases since 2011 saw price growth either slow, stall or reverse in the first two quarters of 2014. The slowed rate of home price appreciation follows a roughly 100 bps increase in mortgage rates in 2013. 'While home price growth has slowed or stopped in most regions, several markets, many of which are in California and Texas, are still overvalued,' said Nelson.Fitch's index is published quarterly and highlights performance trends in legacy and new issue RMBS, house price conditions and mortgage market developments. The HPI index reflects Case-Shiller's seasonally-adjusted national home price index.The Mortgage Market Index -U.S.A. is part of Fitch's quarterly structured finance index reports. It is available at 'www.fitchratings.com' or by clicking on the above link.