ATTOM Data Solutions just released its Q3 2018 Home Sales Report for both single-family houses and condominiums. The median sales price was $256,000, an increase of +1.0% from Q2 2018 and an increase of +4.8% from Q3 2017.
If this rate of home price appreciation doesn’t sound so great to you after a period of blistering hot gains, you’re right. This is the slowest pace of annual home price appreciation (HPA) since Q2 2016. The HPA slowed in 49%, or 74 of 150, of local markets including Dallas-Fort Worth, Chicago and Los Angeles. San Jose, Boise and Las Vegas were among the outlier cities bucking this latest trend of cooling HPAs.
Daren Blomquist, senior vice president of ATTOM Data Solutions, said, “The continued slowdown in the rate of home price appreciation nation-wide and in many local markets is a rational response to worsening home affordability.” Blomquist pins rising interest rates as the cause for decelerating HPAs.
Tendayi Kapfidze, chief economist specializing in mortgage market planning with Lending Tree, said, “I think the key factor underpinning the decelerating price appreciation is the impact of rising rates on the monthly payment…this especially affects the marginal buyer, the buyer who doesn’t have a lot of wiggle room price wise…while there is still strong demand, some potential buyers are falling out of the market altogether and others are moving down in price with the aggregate effect being a moderation in price appreciation.”
In Q3 2018, Seattle experienced the slowest HPA since Q4 2014. That home price growth is “…likely to continue to slow until incomes are able to catch up,” said Mathew Gardner, chief economist with Seattle-based Windemere Real Estate.
On the other hand, markets that have a larger affordability cushion, markets such as Las Vegas, Grand Rapids, Dayton, Boise and Colorado Springs may be “…in danger of overheating if/when home price gains run hot,” said ATTOM’s Blomquist.
Just as some “marginal” buyers don‘t have a lot of wiggle room when it comes to HPAs, real estate agents don’t have a lot of wiggle room when it comes to being on top of HPAs in all markets all the time.